Gland Pharma hits 52-week low; Here’s why

Shares of Gland Pharma slumped as much as 11% to hit a 52-week low at ₹1,681. The development comes days after reports emerged that the pharmaceutical major’s parent company, Fosun International, is under financial distress. Moreover, last week, Gland Pharma reported weak earnings for the July-September quarter. 

Over the past three sessions, the company’s shares have snapped as much as 23%. The pharmaceutical major hit a 52-week high at ₹4,060, on January 6 this year. Over the past 10 months, the pharmaceutical firm's stock has fallen more than 58%. In the past six months, Gland Pharma's share price has dipped 39%, while it shed 8% in a month. The stock has fallen over 12% in the last five sessions.

Fosun International’s financial distress

Fosun Pharma Industrial Pte holds a majority 57.86% stake in Gland Pharma. Recently, Fosun International, the parent company of Fosun Pharma, was downgraded by major rating agencies as the company struggles to raise fresh capital. 

According to reports, the billionaire Guo Guangchang-led company is grappling amidst the debt crisis that has swept China’s real estate sector. Chinese banks have been wary of lending to private firms following the debt default by real estate companies such as Evergrande Group, and Kaisa amongst others. As a result, Fosun, which has been on an acquiring spree in the past by using steady cash flow from insurance firms, is being forced to sell its prized assets at a discounted price to cover its short-term liabilities. In the past few months, the company has been selling its stake in leading real estate companies at discounted rates. 

The company, which owns Wolverhampton Wanderers from the English Premier League, Portugal’s largest bank Millennium BCP, as well as French fashion house Lanvin and resort owner Club Med, currently has a debt worth $90 billion or 650 billion yuan. 

The financial crunch in Fosun’s international business is likely to spook investors in India as well. 

Weak Quarterly results

Last week, the pharmaceutical major reported a decline in profit by 20.14% at ₹241.44 crore in the July to September quarter this fiscal, as compared to ₹302.08 crore in the same period last year. The company’s revenue from operations was down 3% to ₹1,044 crore in the September quarter as compared to ₹1,080 crore in the year-ago period. In India, the company’s revenue from operations slumped as much as 42% to ₹72.6 crore as compared to ₹125.8 crore in the year-ago period. 

Srinivas Sadu, the managing director and CEO of Gland Pharma said, “'Although we have seen increased competition in our new products, we remain confident of our launch pipeline that will ensure sustainable growth. We are seeing positive momentum in our biologics/biosimilar CDMO (contract development and manufacturing) business. ''