Can Glenmark Pharma Taste Success Where Its Peers Have Not?
One of the earliest Indian drugmakers to have focused on
innovative R&D, Glenmark Pharma is now spinning off its R&D business
into a separate company that would be based in the US.
Glenmark Pharma has hired a former executive from Gilead & Novartis to head
the new company. All innovative molecules in the pipeline, including
preclinical assets and technology, the R&D centres in Switzerland, Paramus,
and Navi Mumbai, and the biologics manufacturing facility in Switzerland, along
with 400 employees associated with innovative drug discovery will be part of
the new company in the next six to nine months.
Glenmark's
current innovation pipeline consists of eight assets, including new chemical
entities and new biologic entities in various stages of development. These are
in the areas of immunology, oncology and pain management.
But
will the latest move enable Glenmark to succeed in its quest for discovering an
innovative drug? Several of its peers, including Sun Pharma, Piramal
Healthcare, DRL, Strides Arcolab and Wockhardt, have in the past adopted this
strategy of de-merging their R&D arms – roping in Indian expats to head the
units. However, none has been successful in a big way.
Still,
for Glenmark, the move holds some clear advantages. The spinning-off will
separate the riskier R&D business from the less risky ones. With some of
its molecules in phase II stage of development, the R&D company can
leverage its extensive patient data to help command better valuations.
The
spin-off will also lead to complete transparency on what the company is
spending toward innovative R&D. It will also reduce the intensity of
investments the parent company has to make toward innovative R&D – leading
to improvement in the margin profile of the parent company. Glenmark Phama
annually spends $100-120 million on innovative R&D.
Glenmark
has also attempted to be different from its peers by basing the new company in
the US and hiring a veteran from the Big Pharma to head it. The idea is to
harness global talent and gain from the pharma and biotech ecosystem in the US.
Glenmark
has been among the few players to be consistent with its strategy of investing
in innovation. Over the years, there has been a churn in its research
portfolio. But the latest move may be a decisive step toward commercially
launching an innovative drug.
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