HSBC Global Investment Research, the brokerage and research arm of the HSBC Group, has reiterated a Buy rating on key mid-sized Indian drugmaker Glenmark after the United States regulatory approval, raising its target price and pointing to early signs of recovery in the overseas business.
The call comes as Glenmark Pharmaceuticals secures a first-to-market advantage in a niche inhaler segment, with HSBC arguing that the development could set the tone for earnings growth over the next two years.
The brokerage has set a target price of Rs 2,600, implying an upside of around 21% potential, with its thesis built around improving US traction, follow-up product approvals and a steady domestic business.
A US approval that could revive growth
At the centre of HSBC’s view is the recent approval for a respiratory inhaler in the United States, which it sees as a meaningful trigger for the company’s US business.
“We think recent FDA approval for gFlovent 44mcg inhaler bode well for Glenmark’s US sales pick-up,” HSBC said.
The approval gives the company a first-mover edge in this strength, allowing it to enter a segment where competition is still limited. The launch is expected in March 2026, along with a 180-day exclusivity window that can support early sales momentum.
HSBC sees this as more than just a single product win.
“gFlovent 44mcg approval should function as a stepping stone to build a portfolio of complex inhalers in the US,” the brokerage added.
Limited competition keeps opportunity open
The brokerage points to a favourable market structure that works in the company’s favour, especially after the original branded product was discontinued.
“There are not many known ANDA filers for Flovent besides Teva. Thus, we think gFlovent could be a sustainable opportunity,” HSBC said.
Prescription trends indicate that the approved strength already accounts for a sizeable share of demand, while the next strength under review could expand the opportunity further.
With fewer competitors in the near term, the company has room to scale up without immediate pressure on pricing.
Next approval could add another growth trigger
HSBC is also factoring in a second leg of growth from a higher strength inhaler already filed with regulators.
“Experience and learnings from gFlovent 44mcg ANDA should help it gain faster FDA approval for gFlovent 110mcg,” the brokerage said.
If approved, this would deepen the company’s presence in the segment, given that both strengths together account for a large portion of prescriptions.
The brokerage’s approach assumes a gradual build-up in revenue, with each approval adding to the base.
Earnings estimates move higher
HSBC has revised its earnings estimates to reflect the expected gains from the inhaler portfolio.
The brokerage now expects sales from the product to reach about USD 39 million in FY27 and USD 75 million in FY28, contributing roughly 7% to 10% of overall earnings.
These changes have led to an increase in earnings estimates by 3.3% to 5.4% for FY27 and FY28, along with adjustments in margins and operating costs.
“Our new TP implies upside of c17%, and we retain our Buy rating on expectations of an earnings recovery led by the India and US segments,” HSBC said.
More levers beyond the US business
While the US business is the immediate trigger, HSBC’s view also factors in improvements across other parts of the business.
The brokerage expects supplies from the Monroe facility in the United States to improve after regulatory clearance, supporting product availability. It also sees a recovery in the domestic business adding to growth.
HSBC said the company has “ample drivers to sustain growth” including new approvals, improved utilisation at key plants and better performance in India.
Valuation supported by earnings visibility
At current levels, the stock trades at about 26.3 times its estimated FY27 earnings, which is above its historical average but broadly in line with peers.
HSBC has increased its valuation multiple to 27 times, citing improved visibility in earnings and a stronger growth profile over the next few years.
The brokerage believes the premium is justified given the number of triggers already in play.
Risks tied to execution and timelines
HSBC has also outlined the key risks that could affect the outlook.
These include slower-than-expected recovery in the US business, delays in product launches and setbacks in research and development programmes.
Working capital management is another factor that could influence performance if not handled efficiently.
Conclusion
HSBC’s view rests on a visible set of triggers rather than distant expectations. A key US approval has opened up a fresh opportunity, and follow-up launches could build on that momentum. With earnings estimates moving up and multiple drivers in place, the brokerage sees the company entering a phase of steadier growth, provided execution stays on track.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.