Glenmark to demerge generics business into new subsidiary (and list subsequently)

Glenmark Pharmaceuticals has announced its plans to reorganize its businesses into Specialty and Generics. The new Generic entity called Glenmark Generics Ltd will be a wholly owned subsidiary of the Company and will be listed on the Indian bourses by Q1 FY 2008-09.

 The rationale of the demerger is to strengthen focus in R&D and accelerate the growth in the generics and API business. The objective of the reorganization of the business is to build end to end integration, scale and capabilities in pursuing a generic business, on the GGL side, and to build end to end Global capabilities similar to a Big Pharma Company on the Specialty side.

 

As per the scheme of demerger, the generics and the API businesses of Glenmark Pharmaceuticals Ltd will be moved into a wholly owned subsidiary Glenmark Generics Ltd. The new Company will handle the development, manufacture and marketing of generic formulation and API businesses, while Glenmark Pharmaceuticals will continue to directly manage the novel R&D and branded formulation businesses of the Glenmark group including India, Brazil, Rest of Latin America (excluding Argentina), Russia/CIS, Africa and Asia.

The Generics business will inherit Glenmark's Goa plant for formulations, the three API plants in India, the sales units in the USA and UK and the Argentina oncology operations. In addition, a group from R&D focused on API and Formulation development will also move to the generics Company. The branded business will remain in the Company and retain all remaining assets, branded generic sales groups in India and overseas and all remaining R&D operations related to NCEs, Biologics and formulation development for brands.

Glenmark Generics will come out with an IPO, diluting not more than 30% of its equity capital.  The new company will use capital in GGL to acquire / build specialty US front end with late stage pipeline and / or marketing, further expand GGL's generic foot print globally through acquisitions, expand capacity for generics and focus on expansion into other niche segments.