New Delhi: Ranbaxy Laboratories Ltd, India’s biggest drug maker by sales, reported a 79% jump in its net profit to Rs128.7 crore for the quarter ended 31 March, riding on strong demand from European and domestic customers. The company has also raised its earnings and sales forecast, counting on gains from cholesterol drug pravastatin, which it has been recently licensed to sell in the US, and benefits of a South African acquisition that will accrue in the next few months.
Ranbaxy reported consolidated revenues of Rs1,564.4 crore for its first quarter, a rise of 23% from Rs1,275.3 crore in the year-ago quarter. While its sales in Europe and India have posted revenues of $93million (Rs381 crore) and $65million —increases of 78% and 26%, respectively—those in North America have grown by just 3% to $91 million as the fillip from simvastatin—a drug it exclusively sold with two other companies between June and December last year—wore off.
The drug maker’s net profit gained from foreign exchange movements—the rupee appreciated 1.8% in the January-March quarter—because interest on foreign debt was lower. The net profit, sans this effect, would have been Rs104.6 crore, up about 42% from Rs71.8 crore last year.
The company has also beaten expectations of most analysts by a slight margin as they expected a tepid quarter with no big drug launches. Rajesh Vora, vice-president, ICICI Securities, said Ranbaxy was seeing gains from a European acquisition made last year. “They have benefited from sales of Terapia, a high-margin business that wasn’t available last year, and the growth in Indian business. Pravastatin sales is something to look out for hereafter,” he said.
Ranbaxy MD Malvinder M. Singh too is counting on pravastatin and sales from South Africa-based Be-Tabs Pharma to drive revenues. “We will be aiming for a strong market leadership of pravastatin. The acquisition of Be-Tabs should be complete in May and it will show in our financials from next quarter,” said Singh. The company has now given a stronger outlook of 20% growth in sales and 16% Ebidta (earning before interest, depreciation, tax and amortization) margins, counting on growth across markets. The company is also very bullish in the German market. It had recently got approval to sell copies of 80mg dosage of pravastatin with limited competition in the US market for six months. Ranbaxy is estimated to make sales of $25-30 million from it.
When asked about the attrition among senior managers at Ranbaxy—CFO Ram S. Ramsundar quit few weeks ago—Singh said: “We have changed people’s roles and responsibilities over the last two years. Some people felt they didn’t fit in the new structure, and some I have asked to go.”
Singh has ruled out any big acquisition this year and intends keeping off the Western European and US generics markets “unless it is exceptionally good”. The acquisition strategy will be to add new therapies and increase scale of manufacturing in certain therapeutic categories. Ranbaxy has bought small stakes in Jupiter Bioscience, Krebs Biochemicals and Industries and Zenotech Laboratories last year. These buys gave it access to ‘peptides’ or small proteins used in drugs, fermentation manufacturing units and cancer drugs. Regulatory filing of these products will start this year while launches will happen from 2008. A snag that delayed the approval on pravastatin was the delay in Ranbaxy’s Paonta Sahib facility getting approval from the US drug authorities. Singh admitted that it is taking unusually long to get the clearance for the unit, but said no big drug launches were held up.