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Glenmark Pharma: Significant traction in RoW market drives Q2 revenues amid steady margins

News: Q2 revenues grew 6.6% YoY to Rs.3147.4 crore despite YoY de-growth of 7.8% in Domestic sales to Rs.968.9 crore due to higher base of CoVid products in Q2FY21. US sales were steady with YoY growth of 0.3% to Rs.754.3 crore led by new launches. Europe business grew 6.3% YoY to Rs.338.3 crore amid mixed performance in western Europe being partially offset by growth in key markets. RoW markets grew significantly by 71.5% YoY to Rs.652.6 crore aided by strong traction in the COVID portfolio and also growth in the base business whereas API segment grew by 4.4% YoY to Rs.335.4 crore. LatAm market de-grew 2.4% YoY to Rs.96 crore due to a challenging environment in Brazil. EBITDA margins were steady YoY at 18.8% mainly due to lower gross margins being offset by lower employee expenses. EBITDA grew by 6.8% YoY to Rs.590.2 crore while Adjusted PAT grew by 11.6% YoY to Rs. 257.7 crore.

Views: Glenmark Pharma’s Q2 revenue were in-line with estimates but skewed amid lower than expected margins. Company’s revenues were driven by significant growth in RoW markets with positive momentum across geographies. However, Glenmark’s derma portfolio is facing stiff pricing pressure in the US. Going ahead, traction from the newly commissioned US based Monroe facility will be the key determinant besides sustained product launches. We expect the US to grow on the back of new launches. We will release a detailed report post management conference call.