The company’s recent generics launches in the US have helped boost investor sentiment.
Though the exclusivity period for valacyclovir (Glaxo’s Valtrex brand) may be over, Ranbaxy received another shot in the arm, as it received approval for exclusive marketing of donepezil (brand Aricept), a medicine used to treat Alzheimer’s disease. With the expiry of Aricept patent slated in November, Ranbaxy’s launch of generics is estimated to fetch $230 million (Rs 1,070 crore) of revenues and $110 million (Rs 500 crore) of profits during the exclusivity period of six months.
This has been the fourth such opportunity for Ranbaxy to monetise by launching the generic version of a drug going off patent in the last one year. The company has applied for two more approvals from the US Food and Drug Administration (USFDA) for the carbapenems class of antibiotics. Ranbaxy is also working on improving margins and restructuring its European operations. The decision on hiving off the new drug-discovery units to its promoter Daiichi Sankyo will also help it save expenses of over Rs 100 crore a year.
However, uncertainties over the USFDA compliance for its Ponta Saheb and Dewas plants continue. Ranbaxy has launched atorvastatin, the generic version of cardiac drug Lipitor, in Canada but is not yet able to sell it in the lucrative US market. Even its supplies of anti-ulcerant esomeprazole to AstraZeneca have remained deferred since May 2009 on account of FDA clearance. These have the potential to add Rs 600 crore a year to revenues.
While the management has guided for clearance of FDA issues in a few months, the developments on this front can provide a major boost to the stock.