Glenmark’s Q3 profit surged 48 per cent on the back of strong sales. But, overall earnings are still below estimates as the devaluation of currencies across emerging markets continues to impact operations.

Speaking to Bloomberg TV India, Glenmark Pharmaceuticals Managing Director and CEO Glenn Saldanha blames the sluggish topline growth to currency swings even though margins continue to be pretty steady at 20-21 per cent.

There are concerns being raised that you have missed the mark on all fronts right now. The numbers look solid with 48 per cent profit year-on-year but the market was anticipating you to do a lot better. Take us through the Q3 earnings. Where do you see the mismatch?

I think we grew our topline by 5 per cent. So it has been a challenging quarter as far as emerging markets goes, particularly in terms of currencies, where we have lost out. And that basically resulted in 5 per cent topline growth. We could have done much better in terms of topline growth if the currencies had stayed stable.

So I think that is the biggest mismatch. Otherwise our margins continue to be pretty steady at 20-21 per cent and they could have been better had currencies stayed up on a global basis.

So I think there is definitely an impact of the global situation as far as currencies go due to which you are seeing some weakness in terms of the numbers.

When it comes to Latin America, currency headwinds are here to stay for a while. How are you looking to tackle that?

Overall, if you look at Q3, we were still able to hold on to our margins despite emerging markets coming under pressure on account of currencies — Brazil, Venezuela and the Russian situation. I think all that is already baked into the numbers.

Also emerging markets, which don’t contribute more than 20 per cent of total sales, is becoming less and less relevant for us in terms of overall performance goes.

As far as Venezuela goes, we are still waiting for what are the likely depreciation and the valuation of their currency and so we will see how that plays out.

The existing inventory at the subsidiary is being liquidated but there have been sales that have been captured in this particular quarter. In the next quarter, will you be able to capture some of their inventory sale?

It is pretty much winding down. I think from here on we don’t see any additional sales coming out of Venezuela for the most part. So we are just depleting whatever inventories are there in the market.

Talk about the business in the US. How do you see that business panning out for you?

The US continues to grow from strength to strength for the company. I think we continue to get new product approvals. We just got two more in January. So hopefully you will see sequential growth quarter-over- quarter coming out of the US market. I think the US continues to be pretty stable and do well overall. We have some pretty good products sitting in the pipeline where we are alone or have one or two players in the market. This will be pretty big for the company going forward. So FY17 looks positive as far as the US business goes.

Has pricing in that market been an issue as well?

There is an enormous amount of pricing pressure on the base business because of so many new entrants to the US market and the patent cliff expiring. So in the core business, there is a significant amount of pricing pressure that one is witnessing. But I think we have had a good quarter despite that because of the growth that we have seen in the new products. And we have had products which have positively contributed to the growth.

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