Hurt by stock write off because of the US regulatory enforcements at its Mohali facility and foreign exchange charges, drug maker Ranbaxy Laboratories reported a loss of Rs 454.16 crore for the third quarter ended September 30, against a profit of Rs. 750 crore a year earlier.
Ranbaxy, owned by Japan’s Daiichi Sankyo, clocked sales of Rs 2,750.17 crore during the quarter, marginally up by 3% from Rs 2,668.52 crore in the same period of previous year.
The company incurred an exceptional cost of Rs 69.5 crore mostly due to stock write-off at its Mohali facility, after the US Food and Drug Administration (US FDA) imposed an import alert on the factory in September barring it from supplying medicines to the American market. The regulator said that the company has not met the required current good manufacturing practices (cGMP) norms. An ongoing consent decree with the company has also been extended to the Mohali facility following the enforcement.
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Besides, Ranbaxy has also incurred a foreign exchange charge of Rs 360 crore in the latest quarter, while the year-ago results included a foreign exchange gain of Rs 393 crore.
Sequentially also, Ranbaxy loss has deepened. In the May-June quarter, the company reported a net loss of Rs 524 crore on foreign exchange transactions and loss of goodwill booked at its overseas subsidiaries.
While Ranbaxy’s all three manufacturing facilities in India dedicated to the US market, which accounts for more than 40% of its sales, have now been barred from shipping to the American market, the company management maintained that there is no capacity constraint. When asked if the company is looking to acquire manufacturing facilities in the country to meet the US demand, Sawhney told investors, “We are comfortable with our existing infrastructure, which is sufficient to address our business requirements at the moment.” The company is currently supplying to the US from Ohm Laboratories based in New Jersey.
The company had pleaded guilty in May to US felony charges related to drug safety and agreed to a record $500 million in fines. After falling more than 40% in the months afterwards, the share price had started to inch back up.
During the July-September quarter, Ranbaxy’s revenues from the US market rose to Rs 790 crore from Rs 770 crore a year ago. In the domestic market, sales for the quarter were Rs 570 crore, in-line with the corresponding quarter.
The street was also disappointed as the company failed to indicate any timelines for resolving issues with the US regulator.
On Tuesday, Ranbaxy shares declined on the Bombay Stock Exchange to close at Rs 385.65, down 0.8% from their previous close.