In 2011, ‘Zorg Laboratories Private Limited’ was incorporated in Pune. Glenmark Pharmaceuticals later acquired the company in 2018 and changed its name to Glenmark Life Sciences Limited. After that, Glenmark Pharmaceuticals spun off the API business to Glenmark Life Sciences to focus on other growth verticals. Glenmark Life Sciences is coming up with an IPO, which opens for subscription on July 27, 2021. Here is all you would like to know about the Glenmark Life Sciences IPO.
- Leading developer and manufacturer of selected high value active pharmaceutical ingredients (API)
- These APIs are for chronic therapeutic areas, including cardiovascular disease, central nervous system disease, pain management and diabetes
- The company also manufactures and sell APIs for gastrointestinal diseases, anti-infectives and other therapeutic areas
- Substantial market share in select specialized APIs such as Telmisartan and Perindopril (anti-hypertensive), Atovaquone (anti-parasitic), Teneligliptin (diabetes), Zonisamide (CNS) and Adapalene (dermatology)
- Glenmark Life provides contract development and manufacturing operation services to several multinational and speciality pharmaceutical companies
Currently, Glenmark Life Science operates four manufacturing facilities located in Ankleshwar and Dahej in Gujarat and Mohol and Kurkumbh in Maharashtra. The total annual installed capacity is 726.6KL as of March 31, 2021. In addition, the plan is to enhance production capacities at the Ankleshwar facility (2022) and Dahej facility (2022 and 2023) by an aggregate of 200KLs.
Key company strength areas
- The company holds a leadership position in selected high value and non-commoditized APIs in chronic therapeutic areas.
- API sales across India and exports to countries like Europe, North America, Latin America, Japan, etc. The regulated product segment contributes to approximately 65-70% of revenues
- A strong relationship with leading global generic companies has helped Glenmark Life expand its product offerings and geographical reach. As of March 2021, 16 out of the 20 largest generic companies were customers of the company
- Four multi-purpose quality-focused manufacturing plants and a robust R&D infrastructure. Annual spend on R&D ranges in between 2-2.5% of total revenue from operations
- Experienced management team with a proven track record and strong industry background
About the promoters
Glenmark Pharmaceuticals Limited (Glenmark) wholly owns Glenmark Life Sciences and is the promoter. Glenmark is a research-oriented, innovation-led, global pharmaceutical company established in 1977.
Below is the condensed financial information of Glenmark Life Sciences Limited.
Comparison with other industry peers
Industry average PE ratio of 36.7x
|Fresh issue of shares||Rs 1,060 Cr|
|Offer for sale||Rs 453 Cr|
|Gross issue size||Rs 1,513 Cr|
Utilization of proceeds:
- Pay the outstanding purchase consideration to Glenmark for the spin-off (Rs 800crs)
- Funding capital expenditure requirements (Rs 153crs)
- General corporate expenses
The bottom line
Glenmark Life is a leading manufacturer of high-value APIs used to treat chronic therapeutic cases. In addition, the company wants to strengthen its position through the expansion of its API manufacturing facility.
Robust financials, high return on capital, strong promoter background and experienced management team lend optimism.
India is a top supplier of bulk drugs and formulations. Having said that, the pharma sector is reinventing itself in light of excessive dependence on China for APIs. After that, localizing APIs and bulk drug manufacturing is a huge focus area.
In conclusion, we believe the sector is poised to grow. The company is well-positioned to benefit, and we recommend subscribing to the IPO for a long-term investment.
The information provided in the red herring prospectus filed by the company with the Securities and Exchange Board of India (www.sebi.gov.in) is the basis for this note. However, I recommend that the reader validate the data before making any financial decision. Also, investment in an initial public offering (IPO) is subject to market risks. Therefore, it should be evaluated, keeping your risk profile and investment objective in mind. The author will not be responsible for any financial loss or otherwise resulting from any action taken based on the above.
About the author
The author is a senior finance professional with over fifteen years of work experience in corporate finance. He has an affinity for matters relating to personal finance and investment management. Through his writing, the author wants to share his knowledge and understanding of the subject.
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