Date:04/11/2004 URL: http://www.thehindubusinessline.com/2004/11/04/stories/2004110402481300.htm

Back Glenmark sizzles on future prospects

Our Bureau

Kolkata , Nov. 3

THE Glenmark Pharma stock on Wednesday moved up on buying along with other mid-cap pharmaceutical counters. According to brokers and analysts, today's play in specific drug stocks was largely caused by the prospect of future earning growth.

Glenmark today closed at Rs 339.95, near its 52-week high of Rs 343 on the BSE. The combined volumes on the BSE and NSE, were 11.59 lakh shares. At today's closing price, the stock traded at over 25 times of annualised (half-year) FY-05 EPS.

According to Mr S. Upadhyay of Anagram Stockbroking, the current valuation appears to be stretched. Though he admits to a robust growth prospects, there are areas of concerns too.

"For example, we think, the company's plans to file 10 - 12 ANDA in FY05 and to file Para IV challenges in the segment of CNS, are ambitious and are fraught with risk of failures," he observed.

According Mr Rajesh Agarwal of CD Equisearch, many still find possibility of valuation improvement in the stock. "This perception is based on the company's recent successes in R&D," he added.

The company has achieved a breakthrough in the research for the molecule GRC 3886 for the therapeutic segment PDE4 inhibitors that are used in the treatment of chronic obstructive pulmonary disorder and asthma.

Glenmark received a milestone payment of $10 million from co-developer Forest Labs (Ireland) for the further development of the molecule in the 2nd stage of clinical trials. Forest Labs would develop, register and commercialise GRC 3886 for the North American market and Glenmark would retain the commercialisation rights for the rest of the world.

The compound, if successful in the second and third phases, is likely to reach the markets by 2006, Mr Upadhyay pointed out. The company is currently focusing its R&D efforts on 4 molecules.

It has registered revenues of Rs 160.25 crore for the second quarter of FY05, a growth of 51.77 per cent compared with the corresponding period of the previous fiscal. Net profit growthfor the quarter was 101.11 per cent.