The Hindu Business Line : Ranbaxy net up 10 pc on European exports

THE US markets may be a dampener to Ranbaxy Laboratories Ltd's first quarter performance, but the buoyant performance of the European markets has enabled the drugs major to register a 10 per cent growth in net profits during the three months ended March 31, 2004.

The pharma company registered a net profit of Rs 190.6 crore for the first quarter against Rs 172.9 crore registered last year in the same period, while sales grew by a healthy 18 per cent to touch Rs 1,307.9 crore compared to Rs 1,110.2 crore registered the previous year.

Speaking to newspersons, Dr Brian W. Tempest, Joint Managing Director and CEO (designate) said, "We are ahead of the estimates projected earlier. Europe grew by about 171 per cent and is almost the size of India and the BRIC (Brazil, Russia, India and China) countries also did well."

However, sales in the US market declined by 7 per cent, from $112 million registered during the first quarter of 2003 to $104 million this year. The decline was mainly due to drop in sales of antibiotic, Cefuroxime Axetil, which fell from $46 million in the January-March 2003 to $4 million this year. The drug company was forced to cut prices due to increased competition as a result of expiry of Glaxo's patent for Ceftin.

Dr Tempest added that without Cefuroxmine, the US market grew by 52 per cent. Ranbaxy is pitching its future hopes in the market on new product launches. "About 38 products are waiting for FDA approvals," he added.

The growth in the European markets was impacted by the acquisition of RPG Aventis in France, which contributed $17 million in the quarter. It is now the largest market for the company in Europe followed by the UK and Germany. And as part of its future growth strategy, Ranbaxy will consider further acquisitions in the US and UK market.

Ranbaxy's growth in the domestic market stood at 7.5 per cent, in line with the industry growth rate of 7.3 per cent. The company introduced eight new products including its urology brand, Forzest (Tadalafil) and also forayed the herbal segment with the launch of three new herbal brands.

The board of directors today also approved the audited accounts for the year ended December 31, 2003 and recommended a final dividend of Rs 12 per share.

Earlier in 2003, an interim dividend of Rs 5 per share was paid bringing the total dividend per share to Rs 17.

For the full year the company had recorded consolidated sales of Rs 4,530.1 crore and net profit Rs 759.4 crore.

It also fixed the tenure of the appointment of Dr Tempest as CEO and Managing Director for three-and-a-half years, from July 05, 2004 to December 31, 2007.

Rising rupee cause for concern

THE rising rupee is a cause for concern for exporting companies such as Ranbaxy since a bulk of its business is in dollars.

Even though the recent appreciation has not had a major impact on the company, it is taking precautions.

"We are overall anxious about the appreciating rupee and we are taking precautionary measures including buying forward cover for all our overseas sales," said Dr Tempest.

Ranbaxy, in 2003, generated other income of Rs 100 crore from its hedging activity, which it claimed is "normal" for a company of its size. The company's short-term view is that the rupee would appreciate further.