Ranbaxy had earlier indicated it expected to resume production and supply of the drug in December 2012. However, the product continues to remain missing from the world’s largest drug market. On the Bombay Stock Exchange (BSE), shares of Ranbaxy Laboratories touched a low of Rs 430 on February 5, against a monthly high of Rs 525 in the first week of January. Analysts suggest a drop of Rs 95 is unusual for a large-cap company like Ranbaxy. On Wednesday, shares of Ranbaxy Laboratories ended at Rs 436.35 on BSE, down 0.83 per cent from their previous close.
Ranbaxy did not reply to a detailed questionnaire sent by Business Standard.
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The ongoing crisis is also likely to impact the company’s revenue during the October-December 2012 quarter as well as the ongoing quarter. According to analyst estimates, the generic Lipitor, which is a major revenue churner for Ranbaxy, contributes around 20 per cent of the total base revenues from the US. After its 180-day exclusive marketing period for the generic drug ended in May last year, Ranbaxy’s revenues from the medicine were estimated at $60-65 million, according to analysts. Lipitor contributed around $600 million to the firm’s total sales during the exclusivity period.
“The dip in the share price is mainly because of the company’s recall of the Lipitor generic, which is also likely to impact its revenues during the quarter,” says Praful Bohra, senior research analyst at Nirmal Bang.
A latest report by Morgan Stanley points out that Ranbaxy’s market share of Lipitor in the US has fallen to 2.4 per cent from 42.1 per cent after its recall. But other generic suppliers of the drug such as Apotex, Mylan and Watson gained market share specifically during this period. Another domestic drug maker, Dr Reddy’s Laboratories, commands a market share of 15.3 per cent for the drug in the US, the report said.
The current US market size for the drug is pegged at $150 million. The blockbuster drug, originally developed by Pfizer, witnessed a major price erosion due to increased generic penetration after Ranbaxy’s 180-days of marketing exclusivity ended on May 29, 2012.
Morgan Stanley’s analysis of the US sales shows that Ranbaxy’s US sales during the October-December quarter was down 18 per cent, sequentially. However, revenues of other domestic pharma majors such as Lupin, Wockhardt and Dr. Reddy’s Laboratories are seen to witness growth in the US.
The street is also eyeing Ranbaxy’s forthcoming quarterly earnings with expectations to get some clarity from the management on the issue, as well as on a future growth strategy, said Bohra.
Ranbaxy, which manufactures Lipitor generic or atorvastatin calcium from two of its facilities — one in the US and another at Mohali (near Chandigarh) — voluntarily recalled 41 batches of the drug from the US in November after it suspected possible contamination with very small glass particles (less than 1 mm in size). Following this, the firm also stopped production of the medicine until the cause was thoroughly investigated and corrective measures taken.