Jason Gale, Bloomberg
Singapore: Ranbaxy Laboratories Ltd’s sales will grow the fastest in Europe, Africa and the Commonwealth of Independent States during the next three years, spurred by the drugmaker’s acquisitions there, UBS Securities India Pte said.
Sales in that group of regions will grow 33% to Rs25.36 billion ($621 million) in the year ending 31 December before expanding 21% next year and 18% in 2009, UBS drugs analysts Prashant Vaishampayan and Anand Agarwal said in a report yesterday. That compares with average annual growth of 4.6% in North America and 13% in India.
“Europe will likely yield the largest revenue gain in 2007 partly due to benefits of acquisitions in 2006,” they said.
Ranbaxy, India’s biggest drug producer, made at least eight acquisitions since January 2006, half of them in Europe and South Africa, to cut distribution costs and spur sales of generic medicines. Sales at its Romanian unit, Terapia SA, bought for $324 million in June, will surge 53% to 89 million euros ($120 million or Rs490 crore) this year, UBS said.
Shares of Ranbaxy, based at Gurgaon on the outskirts of New Delhi, rose Rs0.8, or 0.2%, to end trading at Rs394.8 yesterday on the Bombay Stock Exchange. They have gained 0.8% this year, compared with a 3.7% increase in the exchange’s Sensex 30 Index.
UBS rates the shares a “buy” and expects them to reach Rs490 over the next 12 months.
Ranbaxy said this month it will spend about 100 million rand ($14 million) to upgrade the Be-Tabs Pharmaceuticals (Pty) Ltd plant in South Africa it bought for 500 million rand last year.
The facility will eventually produce Ranbaxy’s anti-AIDS drugs for the South African market and may supply other products to its international operations, said Peter Burema, the president of Ranbaxy Europe’s global pharmaceutical unit.
China, India, Brazil and other emerging markets will account for a larger share of worldwide pharmaceutical sales, and the unmet medical needs in emerging markets will spur health-care to outpace economic growth, said Kal Sundaram, GlaxoSmithKline Plc’s vice president of commercial strategy and market expansion in Singapore.
“For a very long time to come, the U.S., Japan and Europe will have a dominant share” of global drug sales, Sundaram said in an interview today. Still, the pharmaceutical industry cannot ignore developing markets, “where there will be a lot of opportunities,” he said.
UBS expects a 3.6% decline in Ranbaxy’s North American sales this year. Revenue from the region is estimated to grow 7.5% to Rs18.4 billion next year and 9.8% to Rs20.2 billion in 2009.
— With reporting by Bernard Lo in Hong Kong, Liza Lin in Singapore and Vernon Wessels in Johannesburg