Glenmark Life Sciences Ltd, a subsidiary of Glenmark Pharmaceuticals Ltd, filed a Draft Red Herring Prospectus (DRHP) with the capital markets regulator SEBI for its initial public offering (IPO). The public issue will comprise a fresh issue of Rs 1,160 crore equity shares and offer-for-sale (OFS) of up to 73.05 lakh shares of a face value of Rs 2, each. The IPO will be subject to market conditions, receipt of applicable approvals and other considerations. The promoters of Glenmark Pharmaceuticals Limited are Saldanha Family Trust, Blanche Elizabeth Saldanha, Glenn Saldanha and Cherylann Pinto.
According to the shareholding pattern of Glenmark Pharmaceuticals Ltd, the promoter and promoter group collectively hold 13.15 crore shares. The book running lead managers to the issue will be DAM Capital Advisors Ltd, BOB Capital Markets, and SBI Capital Markets Ltd. The registrar to Glenmark Life Sciences will be KFin Technologies Private Ltd. The global coordinators and book running lead managers to the issue are Kotak Mahindra Capital Company, BofA Securities India and Goldman Sachs (India) Securities Pvt Ltd, according to DRHP.
Listed industry peers
Upon listing, Glenmark Life Sciences will join the likes of Divis Laboratories Ltd, Laurus Labs Ltd, Shilpa medicare Ltd, Aarti Drugs Ltd and Solara Active Pharma Sciences Ltd. Divi’s Laboratories Ltd has the highest Price/Earning (P/E) ratio of 73 x, while Aarti Drugs the lowest of 11.62x. The average industry PE ratio stands at 31.1x.
Glenmark Life Sciences has proposed to utilise the net proceeds from the issue towards payment of outstanding purchase consideration to the promoter for the spin-off of the API business from the promoter into the company pursuant to the Business Purchase Agreement (BPA). The company has also planned to use the proceeds towards funding the capital expenditure requirements and general corporate purposes. It may be noted that the amount utilised for general corporate purposes can not exceed 25 per cent of the net proceeds of the fresh issue.
For the nine months ended December 31, 2020, Glenmark Life Sciences reported a profit of Rs 246.8 crore, while for the financial year ended March 31, 2020, it clocked a profit of Rs 313 crore. Globally, India is one of the top suppliers of bulk drugs and formulations. Also, India has the highest number of USFDA approved plants outside the US as well as 44 per cent of global abbreviated new drug applications. India supplies a bulk of generic drugs globally not just to under-developed countries but also to the United States and UK. Amid the COVID-19 pandemic, India’s pharma sector is trying to reinvent and move forward from its long-standing dependence on export of generics towards enabling the industry to become an end-to-end drug manufacturer.