The Hindu Business Line : Crisil reaffirms outstanding ratings on Ranbaxy

The reaffirmation follows the ruling of the UK High Court of Justice in a case filed by Ranbaxy against Pfizer, challenging two of latter's patents on atorvastatin (marketed by Pfizer as Lipitor).

The court has ruled that one of Pfizer's patents is invalid, but that Ranbaxy's product infringes the other patent. Ranbaxy has announced that it intends to appeal against the second decision.

Crisil's outstanding ratings on Ranbaxy's debt programmes did not factor in the potential upside arising from the pharma major launching generic atorvastatin in the regulated markets, considering the significant uncertainties involved in patent challenges.

Thus, the court ruling does not alter Crisil's view on Ranbaxy's future financial profile.

The ratings continue to reflect Ranbaxy's leading position as the largest Indian player in the global generics market and one of the top ten globally.

Ranbaxy's strong position as the third-largest player in the Indian pharmaceutical market also drives its rating.

According to a Crisil report, Ranbaxy's strong market position derives support from its sound research and development capabilities across process re-engineering (generics), specialty drugs, novel drug delivery systems and basic research areas.

However, Ranbaxy's declining profitability because of increasing pricing pressures in its mainstay US market, growing R&D expenditure, and high litigation costs continues to be a key rating sensitivity factor.

The ratings do not factor in any significant cash outflow from Ranbaxy because of any liquidated damages or penalties due to ongoing litigation in the regulated markets.

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