Your first quarter numbers for US are almost flat at 9.33%. Is there any specific reason?
Our guidance for the US this year has been lower on account of the likelihood of lower approvals. During the quarter, we didn't get any new product-approval, so that is driving the lower growth. For the second quarter, we got a couple of them (approvals), so things should look better. But at the end of the day, we believe this year will be challenging for the US and that's why we guided to a lower growth in the US – on a full-year basis – of about 12-15% compared to the company growth guidance of around 16-18%.
Is there any significant impact because of channel consolidation in the US?
I feel things are really slow as per FDA approvals and that is why, we are seeing slower growth. That's coupled with the consolidation in the channels. These are two drivers for the changes that are happening in the US markets. But I think, once the approvals scenario improves, we would see growth coming back. The channel consolidation has had some impact, but all I can say that there is no significant pressure because of this.
Do you see your pipeline is getting impacted because of the slowdown?
We are taking a very conservative view right now. We don't have visibility in terms of the US launches. If the launches are more than what we anticipated it will be a great year. I think 2015-16 and 2016-17 will be good years for us.
How do you see US capacity help achieve this growth?
The agenda of the US facility is completely different. The reason to build that facility was to tap controlled substances which cannot be shipped out of India and has to be locally manufactured. The second reason is the risk aspect, to hedge the risk, if we really want to succeed in the US, we need to make some investments on the ground, given the fact that we have sizeable business in the US.
What is your outlook for Europe and emerging markets?
Growth for Europe, Latin America and other emerging economies remained robust. I think emerging markets for full year will be in the 15-20% range. For Latin America, this year, we will continue to see high growth, anywhere between 25-30% and above 20-25% for Europe. That's on account of a lower base and more product launches coming through, particularly in other Latin American markets such as Mexico, Venezuela, Argentina and a few others.
When do you expect the revenues from Crofelmer to start?
By end of this year, we should see some revenues out of Crofelmer. But since it is HIV-related diarrhea, it's relatively a small opportunity. The goal is to get it approved for adult/infectious diarrhea. We are running clinical trials on that right now, so if we receive some good data, it would be a significant opportunity. It would be more of a label expansion by adding some other indications.
Have you already launched this product in some markets? What is the revenue expectation from here?
We would start rolling it this year. We have talked about peak sales of $80 million from the entire franchise.
Regarding the Tarka penalty (that Glenmark's US subsidiary has to pay to Abbott Lab following a patent litigation), what is the status at present?
We have already made a provision of around Rs 200 crore. We may not go for an appeal it. I think in the next 6 to 12 months, we would get more clarity on when we need to make the payment.
How many Abbreviated New Drug Applications (ANDAs) do you plan to file this year? Are you looking at any niche product or segment?
We typically file 20-25 ANDAs in a year. We talked about niche areas like complex injectables, immunosuppressant, oral contraceptives and oncology. We are trying to do products in these segments.
What are Glenmark's expectations going forward in terms of dermatology and respiratory segments?
We are focused on three segments such as dermatology, respiratory and oncology. In respiratory, even though at the inhaler per se, we are relatively small. But it is growing very fast and is doing well for us. The other respiratory products like cough & cold, we are quite big.
What are your thoughts on doing clinical trials in India? Are you doing any clinical trials here at present?
We do have some ongoing clinical trials in India. The whole clinical trial aspect has become virtually very difficult here. I think that has a lot to do with the changes we are going through, so the pendulum is rather strong the other way. It is very challenging to run clinical trials in India particularly for innovative products due to the approval process. Companies are facing challenges in terms of clinical trials across the board. So whether it is new product approvals coming out of India, generic or innovative trials, all are big challenges. We have taken a lot of these trials now overseas. This does ramp up costs, but since these are for the new works, all are included in our budgets. Clearly, the cost of doing research adds to the cost of doing business. It would be really great if the regulations in India get sorted out.
Your R&D spend is currently at 9-10%. Are you looking at maintaining it?
I think we are going to cap it around 10%. So for the next few years, it would remain fixed at around 10%.
Are you looking at any inorganic route at the moment or do you want to grow organically?
Right now, it's completely organic. We are not looking at any major acquisitions. So, that's off the table for the next two years. Our view is to try and leverage R&D in a much better way than to go and acquire and be distracted.