The Hindu Business Line : Ranbaxy tumbles on muted guidance

Mumbai, June 19 Ranbaxy’s management may be upbeat on the recently-concluded deal with Pfizer, on its cholesterol drug Lipitor; but, three international broking firms do not seem to share this optimism in the short term.

And this sent Ranbaxy’s shares down close to 8 per cent, or Rs 45.95, on the BSE.

Dispute settlement

CLSA, JP Morgan and Credit Suisse said in their reports that there seem to be no near-term upside for Ranbaxy from the patent dispute settlement with Pfizer.

Though the Ranbaxy stock fell through the day, it had opened at a high of Rs 612.75 and also touched its 52-week high of Rs 613.70. However, the stock closed the day at Rs 552.25. Ranbaxy was the worst hit on Thursday’s market fall. The Ranbaxy stock was also among the most-traded in the A-group stocks on Thursday with a total of 53.5-lakh shares being traded.

Ranbaxy, after trading hours on Wednesday, announced that it had settled its patent disagreement with Pfizer, allowing it to launch a generic version of Lipitor from November 30, 2011, which is a 20-month delay.

Fairly valued

CLSA, in a note to its investors, said that the deal is a “dampener” and that “settlement of Lipitor gives Pfizer a lot in terms of profits as it delays the generic entry by 20 months, yet denies Ranbaxy of any incremental benefit.”

It also said that the stock was “fairly valued” and was likely to remain range bound up until the Daiichi Sankyo’s open offer.

While Credit Suisse analysts said that as Lipitor sales are falling in the US, delaying the entry into America would “reduce the present value of the opportunity.”

And JP Morgan stated that “given Ranbaxy’s relatively strong position on Lipitor and the deeper pockets of Daiichi, we are surprised by the settlement, as there appears to be no near-term upside for Ranbaxy.”

It is not just the local investors but also the FIIs are worried about the future earnings of the company, because of the delay by 20 months in the launch of Lipitor.

“A lot of FIIs are exiting the Ranbaxy stock, as they feel that the company is not worth so much after the reports by certain stock broking firms.

" It appears that the FIIs want to book profits before the stock falls even further,” said Mr Sanjay Someshwar of Ventura Securities.