Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA/Stable/Crisil A1+’ ratings on the bank facilities of Glenmark Pharmaceuticals Limited (Glenmark).

 

The ratings continue to reflect Glenmark’s healthy growth in the domestic and international generic markets, strong position in the fast-growing chronic therapeutic segment in India and moderate financial risk profile. These strengths are partially offset by the large working capital requirement, and exposure to regulatory risks.

 

The company’s revenue grew 13% on-year (for like-to-like market) during fiscal 2025, led by a strong 32% growth in domestic formulations and continued traction in the European markets, although a 2.5% contraction in the US market restricted a further improvement in the topline. Growth in revenue is expected to hover at 10-12% annually over the medium term, backed by healthy growth in domestic formulations and growth in exports to Europe and rest-of-the-world markets. Sales growth in the US market is expected to revive on account of new product launches. Glenmark’s operating profitability improved from 10.1% in fiscal 2024 to 17.7% in fiscal 2025 on account of benign input costs and moderation in research and development (R&D) expenses. With moderate R&D costs, stable input costs and better operating efficiency, profitability is expected to remain at 18-20% over the medium term.

 

Glenmark’s debt position improved post the sale of stake in Glenmark Life Sciences to Nirma Ltd in March 2024, from Rs 4,627 crore as on March 31, 2023 to Rs 1,231 crore as on March 31, 2024. The company’s debt increased to Rs 2,473 crore as on March 31, 2025, mainly to fund the working capital requirements. The company is expected to continue to incur annual capital expenditure (capex) of Rs 700-800 crore over the medium term. On account of sizeable exports, including to developing nations, working capital metrics of Glenmark have traditionally remained higher relative to peers, and this is expected to continue over the medium term.

 

R&D expenses, which were high at 10-12% of sales over the past 3-5 years, have moderated from fiscal 2024. The company has re-evaluated its R&D requirement, with R&D spends declining to ~9% of sales in fiscal 2024 and further to 7% in fiscal 2025 and likely remaining at similar levels over the medium term. The company shall remain exposed to risks related to R&D in the innovative pipeline, wherein investments are high and returns uncertain.

 

The company recorded an exceptional loss of Rs 372.8 crore during fiscal 2025 on account of settlements for the three plaintiffs case and the restructuring of an overseas unit of Ichnos Glenmark Innovation (IGI). This follows fiscal 2024, where the company recorded an exceptional loss of Rs 900.1 crore due to the settlement on pricing practices with the Department of Justice relating to the generic drug pravastatin and a write-off of the oral solid dosage (OSD) and nebuliser unit in Monroe, US amidst high production costs. While the company does not have any major open lawsuits, any significant write-offs impacting the profit and loss account and balance sheet will be monitorable.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of Glenmark and its 39 subsidiaries and step-down subsidiaries. All the entities, collectively referred to as Glenmark, operate in the pharmaceutical segment and have significant operational linkages and a common management. Crisil Ratings has also amortised goodwill arising from consolidation and intangibles over five years.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

• Diversified presence in the international generics market: Glenmark has a significant presence in the US and Europe, which together accounted for about 45% of the total revenue during fiscal 2025. Revenue from the US market has remained impacted over the past few years due to pricing pressure, lack of significant launches and lower contribution from certain top products. The company had 206 generic products in the US as of March 2025 and 51 applications pending at various stages of approval with the US Food and Drug Administration (US FDA). Newer launches, especially that of WINLEVI in the UK in fiscal 2026, and continued traction from Ryaltris is expected to support growth. Moreover, Glenmark has an established position in the semi-regulated markets of Africa, Asia, Latin America, and Central and Eastern Europe.

 

• Strong position in the chronic therapeutic segments in the domestic market: In the domestic formulations market, Glenmark is ranked 13th with a share of 2.25%; ten of its brands were in the top 300 as per IQVIA MAT (moving annual total) as of March 2025. Contribution of the domestic market to overall sales has been increasing over the past two years and accounted for 34% of the total revenue in fiscal 2025. Revenue from the domestic market grew 32% in fiscal 2025 as formulation sales – with 10.3% growth in Q4FY25 - outpaced the overall market, which grew by 6.9%, with further push from the consumer care business that recorded a primary sales growth of 24%. Domestic revenue is expected to expand at a healthy pace over the medium term, led by the company’s strong market position in the chronic therapeutic segments, such as anti-virals, dermatology, respiratory, diabetes and cardiovascular therapy.

 

• Moderate financial risk profile: Financial risk profile remained comfortable during fiscal 2025 with healthy cash accrual of Rs 1,463 crore and adjusted gearing of 0.27 times primarily backed by a strong operating performance. However, gross debt increased to Rs 2,473 crore as on March 31, 2025, from Rs 1,231 crore as on March 31, 2024, for working capital requirements. Coupled with continued trend in profitability this fiscal, the net debt/earnings before interest, tax, depreciation and amortisation (Ebitda) metric is expected to remain lower than 0.5 time.

 

Amidst moderation in R&D expense, annual cash accrual is expected around Rs 1,500 crore over the medium term. Cash accrual will be sufficient to meet the debt obligation, incremental working capital requirement and annual capital expenditure (capex) spend of ~Rs.600 crore.

 

Weaknesses:

• Large working capital requirement: Working capital cycle is stretched due to the company’s significant presence in emerging economies. Gross current assets remained high at 261 days as on March 31, 2025, and will continue to be sizeable given the large working capital requirement in the US and semi-regulated markets. Moderate payables and short-term bank borrowings help meet the working capital requirement.

 

• Exposure to intensifying competition and regulatory risks: There is intense competition and pricing pressure in the regulated generics market because of increasingly aggressive defence tactics of innovator companies through the introduction of authorised generics, especially for blockbuster drugs going off patent. Furthermore, generics players in the regulated markets are adversely affected by severe price erosion because of the commoditised products and by intense competition and considerable consolidation in distribution channels. Glenmark is also exposed to regulatory risks in the domestic as well as regulated markets. US FDA inspected the company’s Indore plant in February 2025, which resulted in the issuance of Form 483 with five observations. The company is working towards remediating these observations. The company’s plant in Monroe is awaiting US FDA visit post remediation measures being undertaken.

Liquidity: Strong

Unencumbered cash balance stood at Rs 1,675 crore as on March 31, 2025, and the average bank limit utilisation was 61% for the 12 months ended March 2025. Cash accrual is expected to be more than Rs 1,500 crore over the medium term. Any higher-than-expected payout for settlement of pending claims may impact liquidity and debt metrics and will be monitorable.

 

Environment, social and governance (ESG) profile

The ESG profile of Glenmark supports its already strong credit risk profile.

 

• Glenmark Pharmaceuticals Ltd has set a target to reduce the absolute Scope 1 and 2 GHG emissions by 35% by fiscal 2035, from its fiscal 2021 base. These are approved by the Science Based Targets initiative (SBTi).
• Further, the company aims to achieve water neutral operations by the year 2025 and have also implemented Zero Liquid Discharge (ZLD) at three of the eight Indian manufacturing sites, with the remaining sites recycling treated effluent. Further, the water withdrawal intensity (~61 kl per rupee crore of revenue) of the company continues to be relatively lower than peers in FY 2024.
• The company’s lost time injury frequency rate (LTIFR) continues to be relatively low at 0.08 (per one million-person hours worked) for employees and 0 for workers in FY 2024.
• Glenmark Pharmaceuticals Ltd has a supplier protocol in place to conduct supplier assessments and screening on environmental and social criteria, wherein, 100% of the input materials were sourced sustainably.
• The company has an adequate governance structure, with half of its Board comprising independent directors, ~50% being women directors, presence of investor grievance redressal mechanism, whistle-blower policy and extensive disclosures. It also has a board-level ESG committee to provide oversight and directions, and to monitor the ESG strategy and action plans.

Outlook: Stable

Glenmark is expected to sustain its healthy growth momentum while continuing to expand its operating profitability over the medium-term, thereby further strengthening its debt protection metrics.

Rating sensitivity factors

Upward factors

• Sustained high double-digit revenue growth, with operating profitability improving to over 20%, resulting in strong cash generation.
• Improved working capital management and prudent funding of capex leading to sustained healthy debt metrics and higher-than-expected liquidity cushion. 

 

Downward factors

• Sluggish business performance and sustained decline in operating profitability impacting cash generation.
• Further stretch in the working capital cycle or large, debt-funded capex or acquisitions impacting debt metrics; for instance, gross debt to Ebitda increasing to 1.5-1.7 times on a sustained basis.
• Significant payouts for settlement of claims as per contingent liabilities impacting liquidity and debt metrics.

About the Company

Glenmark was incorporated in 1977 by the late Mr Gracias Anthony Saldanha. His son, Mr Glenn Saldanha, is now the chairperson and managing director. The company manufactures pharmaceutical formulations and active pharmaceutical ingredients, which it markets in India and abroad. It also undertakes R&D on new chemical and biological entities. The company has 10 manufacturing facilities spread across India, USA and a few other countries. As on March 31, 2025, the promoters held 46.65% stake in Glenmark, and the rest was held by the public.

 

During fiscal 2025, the company reported revenue of Rs 13,321crore (Rs 11,813 crore in fiscal 2024) and net profit of Rs 686 crore as against a loss of Rs 1,686 crore in the year before.

Key Financial Indicators

Particulars	Unit	2025 (Prov)	2024 (Act)
Revenue	Rs crore	13,321	11,813
Profit after tax (PAT)*	Rs crore	686	(1,686)
APAT margin*	%	5.15	(14.27)
Adjusted debt/Adjusted networth*	Times	0.27	0.15
Interest coverage	Times	11.35	2.31

Note: Above numbers reflect analytical adjustments made by Crisil Ratings

*Adjusted for intangibles and goodwill amortisation

Any other information: Not Applicable