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Shares of Glenmark Pharmaceuticals rose nearly 2.5% on Thursday after the pharma giant announced discovery of a blood cancer drug GBR 401, which falls under biologic category of medicines. Athough discovery of the drug is a positive development, its impact on the company’s financials is a long term story, analysts said.

Biologics include a wide range of medicinal products such as vaccines, blood and blood components created by biological processes.

“It is a positive development for the company,” said Deepika Jain, senior analyst at KR Choksey. “We need to see when the company goes for out-licensing the product and file further trials of the drugs, which is currently under processing mode. The company has total of 10 molecules in pipeline out of which two are in-licensed and one-out-licensed. It's progressing well and the launch is expected in Q4FY12 and post FY15, respectively. All these discoveries hold future potentials.”

Good amount of funding is required in carrying out research to discover drugs. Hence, companies out-license the product to other companies, who also enjoy rights to the medicine. In turn, the former gets an upfront payment from the latter.  KR Choksey has given a buy call on the stocks with a target price of Rs 379 while FirstCall set a target price of Rs 400. The stock is trading at a price to book value of 4.38x, which looks attractive. It has generated a positive return of over 14% in the last one month.

“Glenmark Pharmaceuticals S.A. (GPSA), a wholly owned subsidiary of Glenmark Pharmaceuticals Limited India (GPL), announces the discovery and initiation of IND enabling studies of a Novel Biological Entity (NBE) lead candidate, GBR 401, an anti-CD19 monoclonal antibody. GBR 401 is developed completely in-house by Glenmark’s Biologics Research Centre located in Switzerland,” reads the press release sent by the company.