New Delhi: India’s largest drugmaker by revenue, Ranbaxy Laboratories Ltd, registered a strong growth in the three months ended 31 December helped by exclusive sales of two drugs in the US.
The firm, second in terms of market share, also unveiled a strategy—Project Viraat—targeting small cities and rural areas as well as new segments such as women’s health to bolster its position at the top.
Ranbaxy, owned by Japan’s Daiichi Sankyo Co. Ltd, recorded a 24% margin in earnings before interest, taxes, depreciation and amortization, or Ebitda, against 13% in the same period in 2008.
It swung to a net profit of Rs262 crore in its fourth quarter against a Rs679.8 crore loss a year ago. Global sales rose 25% to Rs2,270 crore.
For 2010, the company forecast a 48% growth in net profit to Rs460 crore from Rs311 crore in 2009, and a 6% rise in sales to around Rs7,800 crore.
Report card: Ranbaxy chief executive Atul Sobti. Pankaj Nangia / Bloomberg
“Ranbaxy’s overall numbers appear fine but their guidance for 2010 is disappointing,” said a Mumbai-based analyst with a foreign brokerage, asking not to be named as he’s not authorized to speak to the media.
“If they will have sales revenue from exclusive launches of generic versions of Valtrex and Flomax as well as Nexium supplies to AstraZeneca Plc in 2010, then why will growth in the year be only 6% on sales?”
The December quarter’s profit was backed by revenue from the exclusive launch of two major drugs in the US—generic versions of anti-herpes drug Valtrex and epilepsy medicine Trileptal—and a hold on costs in various markets, including in Europe.
“Good revenue growth in most key geographies, launch of two first-to-file (generic versions of patented products) in (the) US, and continued cost containment, has ensured consistent quarter-on-quarter improvement in performance,” said Atul Sobti, chief executive and managing director, Ranbaxy.
“The company ended the year with strong business and financial performance, and over achieved on the guidance given for the year,” he added.
Ranbaxy’s US business picked up in the December quarter, with sales growing 78% over a year ago to Rs756 crore.
The firm expects the impact of its new strategy to be visible in the second half of 2010.
“It’s a very ambitious project for us and includes the transfer of our India pharma business headquarters to Mumbai,” said Sobti, declining to divulge more details.
The Gurgaon-based firm, meanwhile, still faces trouble with the US Food and Drug Administration (FDA) and Department of Justice (DoJ).
The FDA had issued an import alert in 2008 against two Ranbaxy plants in India. In a recent letter issued to its Gloversville facility in the US, the FDA also raised concerns about Ranbaxy’s compliance standards and asked the company to review its manufacturing facilities globally.
Sobti said Ranbaxy should have looked more closely at Gloversville, and a problem there may have prompted the FDA to ask it to review all its facilities.
The FDA is expected to inspect one of the two plants under the import alert.
“Our Dewas plant (in Madhya Pradesh) is on the horizon for inspection. There has been a meeting with the FDA over this, and things are progressing with both DoJ and FDA,” Sobti said.
A general travel advisory has delayed the inspection, possibly, until April.
Shares of Ranbaxy, which announced its quarterly numbers on Thursday after the stock markets closed, rose 0.51% to end at Rs454.05 on the Bombay Stock Exchange, on a day the benchmark Sensex index ended nearly flat at 16,254.20 points.