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Ranbaxy sees big scope in anti-retrovirals

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Nithya Subramanian

New Delhi, Oct. 3

FOLLOWING the recent approvals by the US Food and Drug Administration for some of its anti-retroviral drugs (ARVs) and the re-listing by the World Health Organisation, Ranbaxy Laboratories Ltd is expecting some large orders, especially under George Bush's $15-billion President's Emergency Plan for AIDS Relief (PEPFAR).

In fact, Mr Malvinder Mohan Singh, President (Pharmaceuticals), Ranbaxy, had earlier told Business Line, "We hope considerable business comes our way under the PEPFAR project." Under the five-year global initiative to combat the HIV/AIDS epidemic in the African and Caribbean region, about half of the money would be used for treatment of infected persons.

Ranbaxy will launch ARVs in the US market as and when patents for specific drugs expire. For instance, it has launched Zidovudine tablets in the US and recently got approval for Nevirapine, which is used to reduce mother to child disease transmission.

In 2004, Ranbaxy exported ARVs to over 50 countries across Asia, Africa, CIS and Latin America.

NGO market: The company said several non-governmental organisations (NGOs) have started buying from it.

In some of the African countries, the Clinton Foundation along with Ranbaxy and some other generic drug manufacturers have agreed to work together to supply AIDS drugs.

"In those countries, we supply ARVs at highly discounted prices," said a company official.

Anti-AIDS drugs have not yet started contributing significantly to the company's turnover.

"Given the large revenue base of the company, ARVs make only a marginal contribution to the company's topline and bottomline. We expect robust growth in ARV revenues as treatment is being ramped up in most developing countries," said the official.

Pricing pressure: There is a lot of pricing pressure on ARVs and the company does not expect the situation to change, as NGOs, humanitarian agencies and Ministries of Health are the big purchasers. "Prices have already bottomed out and unless something radical happens, we don't see prices falling much further. However, the recent hike in the value of the rupee could lead to an increase in prices," he added.

Competition: Meanwhile, analysts tracking the sector felt that the ARV business is a high volume, low margin one. "The increase in the incidence of HIV/AIDS infections will, nevertheless, ensure that the company has a steady order book. But competition is also intense with other Indian companies such as Cipla, Matrix and Aurobindo Pharma in the same space.

"They too are getting regulatory approvals and, therefore, the segment is commoditised," said a Mumbai-based analyst.

However, they further said the supply of anti-AIDS drugs to high-profile programmes could help the company build an image.

"As volumes under these welfare plans go up, the company may be able have a better bargaining power with their distributors in the international market," the analyst said.

(This article was published in the Business Line print edition dated October 4, 2005)
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