New Delhi: Drug maker Ranbaxy Laboratories Ltd reaffirmed its position as India’s market leader by revenue in pharmaceuticals by posting record sales and net profit in the three months ended 31 March, boosted by the US launch of the generic version of a medicine to treat skin eruptions.
Net sales rose 60% to Rs2,490 crore, compared with Rs1,558.4 crore in the year-ago period, the first time that the company has sold medicines in excess of $500 million (Rs2,255 crore) in a quarter. Net profit for the three months stood at Rs963 crore, three times the amount it posted in the entire 2009 fiscal. The firm had shown a loss of Rs761 crore in the year-ago period. Ranbaxy uses a January to December accounting year.
Also See Steady Growth (Graphic)
The US launch of a generic version of GlaxoSmithKline Plc’s Valtrex brand, which is used to treat skin eruptions, was a major contributing factor to the company’s strong performance in the March quarter.
Ranbaxy won a first-to-file approval for Valtrex, thus getting exclusive marketing rights for 180 days. It launched the drug in the US in November.
“These numbers are a very pleasant upside based on one factor, the non-availability of an authorized generic for valacyclovir (generic Valtrex),” chief executive and managing director Atul Sobti said.
Operating margins continued to improve with cost-cutting measures in place and strong growth in all markets. In the US, Ranbaxy’s valacyclovir formulation achieved a market share of 64%. Sales in the US stood at Rs1,151.5 crore, a rise of 266% compared with a year ago.
Ranbaxy also made money from a missed exclusive marketing opportunity in the US. It had been unable to get approval for a generic version of Flomax—used to treat those with an enlarged prostate—in the US from the Food and Drug Administration (FDA). It, however, enabled another generic manufacturer Impax Laboratories Inc. to launch the drug.
Mint had reported on 5 March that Ranbaxy may still get a one-time payment for enabling the generic launch of Flomax. Confirming this, Sobti said that the firm had received a payment of $50 million from Flomax’s patent holder Boehringer Ingelheim GmbH.
“The results are better than expectations. They have done fairly well in comparison to how they have been performing,” said Sarabjit Kaur Nangra, vice-president (research) at Angel Broking Ltd. “However, once the Valtrex 180-day exclusivity is out, the run rate will not be the same.”
European revenue grew by 14% with sales of Rs310 crore while the Indian business grew 15%, recording sales of Rs345 crore. The growth in domestic business was still lower than the industry average of 18%. In January, Ranbaxy had launched Project Viraat, a plan to push domestic sales.
“Viraat is a very comprehensive plan. We hope that from the third quarter, we will see very good results and expect a growth of about 18-20% from then,” Sobti told analysts.
Ranbaxy’s foreign exchange gains were at $98 million for the quarter and $67 million after tax. Excluding forex gains, its net profit stood at Rs657 crore. Operational earnings before interest, taxes, depreciation and amortization were 42% of sales excluding forex and 55% including forex.
Meanwhile, it’s status quo for the company’s two Indian plants—Dewas in Madhya Pradesh and Paonta Sahib in Himachal Pradesh—which have been warned by FDA on various practices.
Ranbaxy is now focusing on its domestic and Japan business. While Sobti declined to elaborate on the Japanese business because the firm is waiting for a synergy plan with its Japanese owner Daiichi Sankyo Co. Ltd, he said that Japan would be a mid- to long-term story.
“We are supplying our current products in Japan to Daiichi Sankyo Espha Co. Ltd and the development is ongoing,” Sobti said. “It will take at least two years for these products to get any benefit for us.”
Ranbaxy shares rose Rs4, or 0.88%, to end at Rs.458.25 on the Bombay Stock Exchange.
Graphic by Ahmed Raza Khan/Mint