Glenmark Expects Cash Surge From License Deals in Next 18 Months

  • Diabetes business to grow 30 percent per year next three years
  • Open to transformational acquisition after three or four years

Glenmark Pharmaceuticals Ltd. expects a surge of new cash to hit its books in the next 18 months from licensing out its intellectual property as it seeks to transform from a maker of generic medicines to developing new ones.

The biological and chemical treatments Glenmark is researching won’t be ready for market until at least 2020, but the Indian company has already managed to glean $200 million from licensing deals around the intellectual property. More such deals with major international drug firms are on their way, according to Managing Director Glenn Saldanha.

"You will see further licensing deals happening which will get a significant amount of cash coming into the business," he said in a July 14 interview at Glenmark’s Mumbai headquarters. "A lot of our pipeline will continue to get partnered up."

Saldanha declined to say how much cash he was expecting or what companies the deals would be struck with. The cash would be used to pay down debt and invest in new products, he said. Glenmark’s stock rose as much as 1 percent as trading commenced today in Mumbai, touching a one and a half month high.

Glenmark gets the majority of its revenue from the sale of generic drugs, and Saldanha is now looking to catapult the company he inherited from his father into the more lucrative business of novel therapies. Indian and Chinese drugmakers are growing increasingly ambitious in their efforts to produce blockbuster medicines. Still, getting approval for brand new drugs is a lengthy process and globally only a small percentage of experimental treatments end up successful.

Glenmark has four biological medicines currently in clinical trials including treatments for breast cancer and autoimmune disease. Saldanha hopes at least one can take off.

"Even if one of these go to market we’re looking at a blockbuster, multibillion dollar drug," Saldanha said. "The revenue stream is generic, but the goal is to be innovative."

In the meantime, diabetes has emerged as a major area of Glenmark’s generic-drug business and is expected to grow by about 30 percent per year over the next three years in India, he said.

Saldanha doesn’t anticipate acquisitions playing a part in his ambitions in the immediate future and he’s ruled out diluting equity further with a share sale after the company did a convertible bond deal last month. However, down the road he’s leaving open the possibility of further dilution to fund a large acquisition, if it brings him closer to his goal of transforming the business.

"Three, four years down the line there’s definitely a possibility we would do some transformational stuff," he said. "Our first goal is to do what’s best for the business. The dilution of equity is secondary. We will do what’s best for the business."

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