Crisil Ratings has revised the outlook on Glenmark Pharmaceuticals Limited’s long-term bank facilities to ‘Positive’ from ‘Stable’, while reaffirming the rating at ‘Crisil AA’. The short-term rating remains at ‘Crisil A1+’. This revision is based on the expectation of improved business performance and a stronger financial risk profile following Glenmark’s exclusive global licensing deal with AbbVie Inc. for its lead innovation asset, ISB 2001. The deal includes an upfront payment of $700 million, milestone payments of up to $1.225 billion, and double-digit royalties on future net sales.
In fiscal 2025, Glenmark’s revenues grew 13% to Rs. 13,321 crore, driven by a 32% growth in domestic formulations and traction in European markets. Although the US market contracted by 2.5%, revenue growth is expected to average 10-12% annually going forward, driven by growth in domestic formulations and exports to Europe and other markets. The company’s operating profits remained steady at around 18%, and profitability is expected to improve gradually, averaging 20-22% over the medium term.
Glenmark’s financial risk profile is expected to improve significantly due to the substantial upfront payout from the licensing deal. The company’s net debt increased to Rs. 797 crore as of March 31, 2025, from Rs. -427 crore as of March 31, 2024, but the annual cash accruals of around Rs. 2,000 crore are expected to be sufficient to meet debt obligations and incremental working capital requirements. The company’s unencumbered cash balance stood at Rs. 1,675 crore as of March 31, 2025, and the average bank limit utilization was 61% for the 12 months ended March 2025.
Crisil Ratings has combined the business and financial risk profiles of Glenmark and its 43 subsidiaries, which operate in the pharmaceutical segment and have significant operational linkages and a common management. The ratings agency expects an improved business and financial risk profile for Glenmark, driven by improved profitability and a stronger balance sheet position. The licensing deal with AbbVie is expected to significantly improve the company’s financial risk profile, with proceeds largely to be deployed for organic growth.
Overall, the revision in outlook to ‘Positive’ reflects Crisil Ratings’ expectation of improved business performance and a stronger financial risk profile for Glenmark, driven by the licensing deal with AbbVie and the company’s strong operating performance. The ratings agency expects Glenmark’s revenue growth to average 10-12% annually going forward, driven by growth in domestic formulations and exports to Europe and other markets. The company’s financial risk profile is expected to improve significantly due to the substantial upfront payout from the licensing deal, and the ratings agency expects an improved business and financial risk profile for Glenmark over the medium term.