New Delhi: Drug maker Ranbaxy Laboratories Ltd posted a loss for the second straight quarter on foreign-exchange fluctuations and a US import ban on 30 products.
In the three months ended 31 December, the firm, India’s largest drugmaker by revenue, reported a net loss of Rs680 crore, compared with a net profit of Rs188 crore in year-ago quarter. The company was acquired by Japan’s Daiichi Sankyo Co. Ltd in November.
In the previous quarter, Ranbaxy had lost Rs395 crore on account of a loss on currency hedges and a one-time inventory writedown caused by the ban imposed in September by the US Food and Drugs Administration (FDA) on products made at its two plants in Dewas, Madhya Pradesh, and Paonta Sahib, Himachal Pradesh.
Explaining losses: A file photo of Malvinder Singh of Ranbaxy. He attributed the unprecedented forex volatility following unforeseen global financial crisis and almost 25% dollar-rupee movement for the losses. Harikrishna Katragadda/Mint
A Mint preview of five analysts had averaged Ranbaxy’s fourth-quarter net profit at Rs50 crore, excluding forex losses. The firm follows a financial year that starts on 1 January.
Analysts had also predicted a sharp decline in Ranbaxy’s US sales and Mint reported on 22 January that Ranbaxy was the only Indian generic drugs maker that had seen slowing sales in that market.
Ranbaxy ended its financial year with a loss of Rs915 crore, against a profit of Rs787 crore it posted last year. In the fourth quarter, the firm reported a one-time non-cash loss of Rs784 crore due to the adoption of AS30, a financial instrument to ensure higher transparency in accounting. Another Rs192 crore was written off on account of foreign currency losses due to a fall in rupee’s value against the dollar.
Chairman, managing director and chief executive officer Malvinder Mohan Singh attributed the “unprecedented forex volatility following unforeseen global financial crisis” and the “almost 25% dollar-rupee movement” for the losses. The Indian rupee fell 3.7% in the three months ended 31 December, its fourth straight quarterly drop. Singh also said that the “FDA alert was another hurdle”. The company’s net loss, excluding units, was Rs807 crore.
The woes with FDA continued to affect the company negatively through the last quarter as well, with its US sales dropping to $89 million (Rs435.21 crore) from $94 million in the previous quarter. In the fourth quarter of the previous year, Ranbaxy’s US sales were $104 million.
Sales in North America, the company’s biggest market, fell 8.8% to $103 million from $113 million in the year earlier.
Global sales for the three months to December rose 6% to $387 million (Rs1,910 crore) quarter-on-quarter, compared with the 19% figure of 2007. Global sales for the year rose by 8% to $1,667 million, down from 20% in the previous year.
Another hit for the company has been the failure to launch its generic version of GlaxoSmithKline Plc.’s Imitrex in the US market within the 180-day exclusive period. “We are ready to launch but awaiting FDA approval,” said Singh, adding that “the (application) for Imitrex was filed out of India and we have moved the product to another facility”. Mint had reported on 9 January that the filing was done from Ranbaxy’s FDA ban-affected facilities.
After the takeover by Daiichi and reconstitution of the board of directors, Singh said the most important focus of its guidance for financial year 2009 would be to “overcome the US FDA ban”.
While suffering a setback in the US following the ban, the company also recorded a 13% decline in sales for the quarter and a 5% fall for the year in the European market.
The stock fell 9.3%, the most in almost three months, to Rs186.40 at close in Mumbai trading on Wednesday. Ranbaxy has dropped 26% this year and is the second worst performer on the Bombay Stock Exchange’s benchmark Sensex index after property developer DLF Ltd. Ranbaxy declined 41% last year.
Bloomberg contributed to this story.