The Hindu Business Line : Ranbaxy stock hits lowest level in a year

Mumbai, Sept. 26 The multiple negative news surrounding pharma giant Ranbaxy, the latest being that the US AIDS programme would stop funding three of its medicines, dragged the company’s stock down by eight per cent on Friday.

The stock closed down Rs 272.40 on the BSE. During the day the stock touched an intra-day low of Rs 269.05, which is also the lowest it has traded in the last one year. In the last one month, the company’s share price has gone down by 47 per cent.

A total of 17.15 lakh shares of Ranbaxy were traded on the BSE on Friday,while on the NSE more than 39 lakh shares of the company were traded. It dipped 8.11 per cent on the NSE to close at Rs.272.10.

“Last week, after the USFDA said that it would stop certain drug imports by made by the company, the stock has taken a further beating,” said an analyst with a stock broking firm.

Reports late on Thursday evening stated that the USFDA had suspended funding for three of Ranbaxy’s generic HIV/AID drugs. This was following the violations relating to two of the company’s production facilities at Paonta Sahib and Dewas in India. Last week, the stock lost almost 24 per cent.

The company has, however, maintained that its drugs are safe and effective. Ranbaxy’s share prices have been highly volatile since the announcement of the $ 4.6-billion Daiichi-Sankyo deal to buy out Ranbaxy promoter family’s entire stake. Added to that is the flow of negative news surrounding the scrip, that has resulted in diminishing investor sentiment towards the scrip, a market-observer said.

In a recent report, Morgan Stanley maintaining “equal-weight rating” on the stock, said the US business accounts ($400 million) for 25 per cent of Ranbaxy’s overall revenues, and “we estimate that at least half of this will get impacted by the FDA action”.

“Plus, quite a few of the pending ANDAs will also get hurt. After this action, Ranbaxy’s only US-based facilities will be supplying for US business (until large SEZ at Mohali is commissioned),” the report added.

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