The Hindu Business Line : Tepid Q4 for Ranbaxy; setback in US market

Strong sales of drugs in emerging as well as certain developed markets helped Ranbaxy Laboratories to post a growth of 5 per cent in consolidated revenues (in rupee terms) for the last and final quarter of 2007, better than street expectations.

While the revenues from the US, North America and France grew modestly, contribution coming from high margin branded medicines from other European markets, Africa, Brazil and Latin America helped Ranbaxy achieve its guidance on earnings before interest, depreciation, tax and amortisation (EBITDA) margin (16.5 per cent of sales).

Key development

Performance in the US markets, which accounts for around 20-25 per cent of Ranbaxy’ sales, suffered this quarter in the absence of sales of exclusive products.

Excluding foreign exchange gains/losses on translation and extraordinary items, net profit was at Rs 180 crore for the quarter, representing 12 per cent growth relative to the corresponding period last year.

Overall for 2007, Ranbaxy recorded 9 per cent growth at consolidated sales of Rs 6,635.3 crore and 15 per cent jump in profit after tax in rupee-terms, excluding forex gains.

EBITDA margin-to-sales stood at over 16 per cent, which meets the company’s guidance. Another key development in the form of a decision on de-merging its New Drug Discovery Research unit has been deferred and will now be announced in February. Reports indicate that Ranbaxy will also announce a patent settlement on billion-dollar drug by the end of this month.

This year, Ranbaxy has settled two litigations pertaining to exclusive products and this could lead to launches in 2009 and 2010. These might act as medium-term triggers for the stock price, which has fallen 9.3 per cent in the last week.

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