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Business News/ Home-page / Daiichi Sankyo posts $3.7 bn Q3 loss on Ranbaxy
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Daiichi Sankyo posts $3.7 bn Q3 loss on Ranbaxy

Daiichi Sankyo posts $3.7 bn Q3 loss on Ranbaxy

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Tokyo: Daiichi Sankyo, Japan’s third-largest drugmaker, posted a $3.7 billion quarterly loss and forecast its first ever annual loss, hit by a slide in the value of its stake in India’s Ranbaxy Laboratories.

Shares of Daiichi Sankyo were down about 1% after the announcement, outperforming a 3.7% fall in the benchmark Nikkei average.

Japanese drugmakers, under growing price pressure and hurt by the yen’s strength, are also seeing their earnings battered by one-off costs and losses stemming from recent acquisitions.

Like their global rivals, they are using acquisitions to head off large drops in revenue after patent expirations on key drugs.

Daiichi Sankyo bought a controlling 63.9% stake in Ranbaxy, a major generic drugmaker, last year for nearly ¥500 billion to diversify its revenue base

Earlier this month Daiichi Sankyo said it would book an appraisal loss of ¥354 billion on the stake after Ranbaxy shares lost more than half their value amid the stock market turmoil and after the US blocked dozens of Ranbaxy drugs due to procedural violations at the drugmaker’s plants in India.

Daiichi Sankyo, created through a merger in 2005, incurred a net loss of ¥331.8 billion ($3.7 billion) in the three months to December, compared with a ¥36.18 billion profit a year ago, while revenues shrank 12% on a stronger yen and government-mandated price cuts.

For the full year to March, the company now forecasts a net loss of ¥316 billion ($3.5 billion), compared with the previous estimate of a ¥65 billion profit and the average forecast for a ¥280.4 billion loss from seven analysts polled by Reuters Estimates.

The company, however, kept unchanged its plan to pay a dividend of ¥80 per share for the full year, up from ¥70 last year.

Shares of Daiichi Sankyo lost 22% in October-December, roughly in line with the Nikkei average.

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Published: 30 Jan 2009, 09:45 AM IST
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