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Though Ranbaxy Laboratories has seen both sales and profits plummet in the March 2011 quarter, the declines were in fact much lower than expected. The drug maker reported a quarterly profit of Rs 306 crore, about 68 per cent lower than the year-ago quarter. The drop was less than expected as the year-ago quarter was boosted by sales of limited competition generic drug Valtrex. Consolidated sales too were down by about 14 per cent to Rs 2,143 crore, while EBITDA margin at 19 per cent was about half from what was reported in March 2010 quarter.
India grows
Ranbaxy continued to reap the benefits of Project Viraat, the massive sales drive that it had launched last year to further its growth in the domestic market. It put in a growth of over 14 per cent for the quarter, even as it managed to improve its market share to 4.78 per cent from 4.63 per cent in March 2010 quarter. Currently, it has a field force of over 4,200 agents. With expansion for the Indian market largely done, the company can be expected to keep up the growth momentum.
Its North America sales were down 35 per cent, led primarily by the drop in sales of valacyclovir in US, post exclusivity. Though March 2011 quarter too has a proportion of First-to-File revenues (that from Donepezil launched in December 2010 quarter), it hasn't been as significant as generic Valtrex. Among other regions, Europe (driven largely by Romania), Asia-Pacific, CIS and Africa registered growth.
No immediate resolution
However, a key uncertainty for Ranbaxy undoubtedly arises from the fact that it is yet to make significant progress with regards to its ongoing remedial measures with US FDA and Department of Justice. The management has said that negotiations for a comprehensive resolution are underway. While this would continue to keep the stock price under pressure, that a US court recently rejected Mylan's plea against Ranbaxy provides some relief. Mylan had in March this year sued the US drug administrator, seeking to block Ranbaxy's exclusive rights to sell a generic version of blockbuster anti-cholesterol drug Lipitor.
It nonetheless is crucial that the drug maker settles the issue with the US regulatory agencies much in advance before the November 2011 deadline, as it is the first firm to file an abbreviated new drug application to launch a generic Lipitor. This cholesterol lowering agent had sales of over $7.2 billion for the year ended September 2010.
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