Ranbaxy Laboratories Ltd’s sales guidance of Rs8,500 crore for 2011 may seem conservative and even disappointing, especially compared with the reported revenue of Rs8,551 crore in 2010. Last year, too, it gave a sales guidance of Rs7,800 crore, and has outperformed it by 10%. Ranbaxy’s guidance is for the base business and does not include first-to-file US generic opportunities, till a launch is confirmed. Thus, its 2011 guidance does not include the impact of the launch of generic Lipitor in late 2011, which will give a sizeable boost to revenue.
In 2010, Ranbaxy’s sales rose by 16%, while in constant currency terms they rose by 23%. Since the company has given annual audited results, the quarterly results—which are of greater interest to investors—have been computed by deducting nine-month figures from the annual figures and are hence indicative in nature.
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In the December quarter, overall sales fell 9%, chiefly due to a 17% decline in sales outside India. This was primarily because of revenue from generic products valacyclovir and oxcarbazepine suspension in the US market in the six-month exclusivity period in the year-ago period. Compared with the September quarter, sales in markets outside India are up by about 11%.
In 2011, the company will also report sales from the generic version of Aricept, a blockbuster drug with US revenue of about $2.6 billion (Rs11,750 crore today). It launched this drug in end-November.
Ranbaxy’s operating profit margin has improved by nearly four percentage points on a sequential basis, chiefly due to higher sales growth. This was enough to more than offset the increase in raw material costs, wages and other expenses. Ranbaxy’s profit before tax and exceptional items in the December quarter, therefore, rose by about 57%, despite a sharp jump in depreciation and lower other income. This quarter had seen a $40 million goodwill impairment charge on its French operations, which is a one-off development.
The company is entering 2011 on a strong note and has at least one big launch due by the end of the year. Any more big launches will be a bonus. Its unresolved compliance issues with the US Food and Drug Administration, however, have been dragging for a long time. This will be another key development to watch out for.
Ranbaxy’s share was down by about 3% after the results were announced, as investors reacted to lower-than-expected quarterly numbers.
Graphic by Naveen Kumar Saini/Mint
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