Ranbaxy plans to turn around China JV soon

CII seminar on pharma sector

Ranbaxy Laboratories hopes to turnaround its ailing operations in China within a year after restructuring its business strategy.

Ranbaxy has a presence in China through a joint venture, Ranbaxy Guangzhou China Ltd (RGCL), in which its holds 83 per cent stake. The venture, set up in 1993, manufactures dosage forms of anti-bacterials, cardiovasculars and analgesics.

The company registered sales of $5 million (about Rs 23 crore) in the first half of 2004 and clocked a turnover of $12.3 million (about Rs 56 crore). The subsidiary, however, reported a loss of about Rs 4 crore last year.

Malvinder Singh, president (pharmaceutical) of Ranbaxy, said: "We have decided on a new strategy for our Chinese operations. We have appointed distribution agencies to market our products in the region." This is in contrast to its earlier strategy of marketing products through the joint venture.

"We are also planning to widen our product portfolio for the market and expect to turnaround our Chinese operations by the end of next financial year," Singh said. He was talking to reporters at the sideline of a CII Pharmaceuticals summit.

Meanwhile, Ranbaxy will be increasing its research and development expenditure by 1 per cent of sales every year. It is expected to touch 10 per cent of total sales by 2007, from around 7 per cent now, Malvinder Singh said. The company's turnover is around Rs 4,000 crore.

While Ranbaxy has around 1,045 scientists on its rolls, the number is expected to increase to around 1,500 in two years. The company has a capital expenditure plan of $ 100 million for the current financial year.

About 80 per cent of this will be used for domestic expansion. The company also plans to acquire three companies in the US and Europe by 2007.