Glenmark Pharmaceuticals

Investment case

Turnaround: net cash, innovation royalties

Why this business

Mumbai-based branded-generics and specialty pharma company with FY26 revenue of Rs 16,983 cr. Q1FY27 revenue split: India formulations Rs 1,432 cr (36%), North America Rs 1,097 cr (27%), Europe Rs 747 cr (19%), Emerging Markets Rs 730 cr (18%). Owns global respiratory brand Ryaltris (commercialised in 57 markets, secondary sales +40% YoY) and EU rights to dermatology brand Winlevi; innovation arm Ichnos Glenmark Innovation (IGI) out-licensed the trispecific myeloma antibody ISB 2001 to AbbVie in July 2025 ($700 mn upfront, up to $1.225 bn milestones plus double-digit royalties). Balance sheet moved from Rs 2,473 cr borrowings (Mar-25) to gross-debt-zero with Rs 800-900 cr cash after the AbbVie upfront.

What we believe

1. 01Balance-sheet turnaround is done: borrowings fell from Rs 2,473 cr (Mar-25) to Rs 594 cr (Mar-26) and management now reports gross debt zero with Rs 800-900 cr cash, after the $700 mn AbbVie upfront for ISB 2001.
2. 02Base business is growing faster than peers: Q1FY27 revenue +23.1% (18%+ ex deferred income) with India +15.5% vs IPM MAT growth of 10.2%; FY27 guidance is 18%+ base-business growth and 21-22% EBITDA margin vs 20.0% in Q1.
3. 03Free optionality on innovation: ISB 2001 (AbbVie) carries up to $1.225 bn in milestones plus tiered double-digit royalties with 160+ patients dosed in Phase 1; ISB 2301 IND expected in CY2026 and could be the next out-licensing event.
4. 04US respiratory pipeline is finally converting: first ANDA for fluticasone 44 mcg with 180-day exclusivity, fluticasone OTC nasal spray approved, Monroe injectables plant got a VAI EIR (Nov-2025), 53 ANDAs pending and 2-3 more respiratory approvals expected in H2FY27.
5. 05Domestic GLP-1 lever: GLIPIQ semaglutide launched 21-Mar-2026 at Rs 325-440/week, the lowest price among the four day-one launchers (Ozempic Rs 2,200/week), while MOSL models 25% domestic-formulations CAGR FY26-28.

Why now

TTM PE of 22.2x is flattered by the FY26 ISB 2001 licensing income; on MOSL FY27E EPS the stock is ~32x vs the 20-25x brokers use as target multiples. 5-year average PE not sourced (unverified). EV/EBITDA 15.0x; dividend yield 0.2%.

Market disagreement

• Lupin: Lupin is cheaper (16.2x TTM PE, ROE 28.7%) but its FY26 earnings are inflated by US exclusivity products (gMirabegron/gTolvaptan) that roll off; Glenmark offers cleaner 18%+ base growth plus un-modelled ISB 2001 milestones.
• Cipla: Cipla trades at 31.3x TTM with TTM sales +2% and profit -34% (gRevlimid loss, US pricing); Glenmark grows 23% with a net-cash balance sheet and no single-product cliff.
• Zydus Lifesciences: Zydus (23.7x, ROE 21.2%) has similar quality but a heavier US-generics/gRevlimid dependence; Glenmark's mix is 73% ex-US branded/specialty (India, EU, EM) with Ryaltris/Winlevi giving brand-like durability.

Position sizing

Turnaround Mid cap  2.4% of the PMS on $31 Jul 2026 (August rank 11). Satellite positions are owned for an asymmetry, sized up when the cycle rewards risk and reduced when it does not.

Catalysts

• H2FY27: 2-3 US respiratory ANDA approvals expected (fluticasone 110 mcg, ipratropium bromide) plus gFlovent ramp from Monroe.
• CY2026: ISB 2301 IND filing (potential second out-licensing) and any AbbVie development milestone on ISB 2001 as Phase 1 dose-expansion data matures.
• Q2FY27 results (~early Nov-2026): first read on whether EBITDA margin is tracking the 21-22% FY27 guidance and on GLIPIQ semaglutide uptake in India.

Risks and response

• FY26 earnings quality: reported FY26 EBITDA of Rs 4,572 cr (27% OPM) includes ISB 2001 licensing income; clean run-rate EBITDA margin is ~20%, so headline TTM PE of 22x understates true valuation (~32x FY27E).
• Margin squeeze from geopolitics: management flagged API and logistics cost inflation hurting margins for 'at least 2 quarters'; Q1 gross and EBITDA margins contracted 122/119 bp ex licensing income.
• US regulatory/launch risk: 53 pending ANDAs and the gFlovent/gFlonase ramp depend on Monroe and Indian plants staying clean; ISB 2001 milestones are binary and none have triggered yet.

Thesis-break conditions

Not stated separately on this page; the risk list carries the monitoring triggers.

Review history

• 8 Sep 2026 · Yash Palod · one-pager in "Why We Own What We Own" (p41) · portfolio as of $31 Jul 2026
• 31 Aug 2026 · Classification in the August top-30: Value (July book: Turnaround)

Source: Buoyant_Why_We_Own_What_We_Own_Sep2026.pdf (portfolio as of 31 July 2026), p41. Internal; external publication of these fields is controlled by audience policy.