The Hindu Business Line : Ranbaxy to set up arm in Australia; enter NZ also

Dr Brian Tempest, CEO (Designate), Ranbaxy, explains a point as Mr Atul Malhotra, Head Global Consumer Healthcare Regional Director, Asia Pacific and Middle East, Ranbaxy, looks on. — Ramesh Sharma

New Delhi , April 6

AFTER marking its presence in almost all the continents, Ranbaxy Laboratories Ltd will consolidate its operations Down Under next month by setting up a subsidiary in Australia followed by a foray into New Zealand. This initiative will give a boost to Ranbaxy's target of becoming a $2-billion (Rs 8,800 crore) company by the end of 2007.

Dr Brian W. Tempest, Joint Managing Director & CEO (Designate), Ranbaxy, told Business Line: "We have already received board approval and the Australian subsidiary will be operational by June this year."

The pharmaceutical company has six supply agreements in the country. But by setting up the subsidiary, it will build the business organically from grassroots. And depending on the success in the Australian market, Ranbaxy will expand into New Zealand.

Named Ranbaxy Australasia, the subsidiary aims at taking advantage of the forthcoming patent expiries in the country. "The reason why we chose now to progress into Australia is the fact that patent expiries have a different time scale in Australia compared to the rest of the world. There are a lot of big molecules that would go off patent in Australia in the next couple of years. So we are looking at taking advantage of that," Dr Tempest said.

Ranbaxy will be studying the market for the next 12 months, by which time it hopes to receive approvals from the Australian drugs regulator, Therapeutic Goods Administration (TGA). It hopes to formally launch its products in a year's time under the Ranbaxy brand name. And being in the generics business, it will offer products in different therapeutic segments.

"The central idea to capture is that Ranbaxy has reached a level of maturity internationally where we are now much more confident and keen to go with the Ranbaxy brand as opposed to the past when we used to supply materials and the brand was the local manufacturers'. And that is the shift we are making all over the market," said Mr Atul Malhotra, Head Global Consumer Healthcare and Regional Director - Asia Pacific and Middle East, Ranbaxy.

Presently, the revenues from Australia are just $3.5 million, but the company hopes to achieve "significant multiples of what we are doing now. We are building a five-year plan," said Mr Malhotra. While the margins generated from the Australian market may not be as high as the US market, Ranbaxy feels that they are "interesting margins and worth our while."

The size of the drugs and pharmaceutical market of Australia is estimated to be $4 billion, which is almost as much as the Indian market. It was the 14th largest market in 2002, a rung below India.

However, the advantage with being present in the Australian market is that the drug filings are related to Europe.

"The same dossiers for drug filings used in Europe could be used in Australia," Dr Tempest said, which makes approvals easier. While the investment in the subsidiary is nominal, "it is a signal of start of a process," Dr Tempest added.

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