The expected delay in the launch of Imitrex, a migraine drug, in the US market, will hurt the Rs 6,648 crore Ranbaxy Laboratories. The Street had been hoping for revenues of around $80-100 million from sales of the generic in the US.
Hopefully, the company will manage to get approvals for a couple of other products —Velacyclovir (anti-herpes) and Tamsulosin (alpha-blocker) — which it hopes to be selling exclusively in the US in 2009 and 2010.
In the meanwhile, doing business in the US market isn’t getting easier for the firm that was recently acquired by Japanese drug maker Daiichi. According to Morgan Stanley, Ranbaxy has been losing share in the US market and according to IMS data, the company has lost 45 per cent of prescriptions volumes in a relatively short span of time.
Moreover, the report also mentions that there has been a drop in products which are not under import alert. In fact, analysts point out that Ranbaxy’s revenues, both from the US and European markets, for the September 2008 quarter are believed to have come off in dollar terms.
Both these markets are important for the company, since they bring in an estimated 35-36 per cent of total revenues, in dollar terms. Ranbaxy’s problems in the US market began after the FDA ruling, in September 2008, that disallowed it from selling around 30 generic medicines, made at its plants in Paonta Sahib and Dewas, in the US market.
Exact figures are not available but analysts believe that the banned drugs account for around 30-40 per cent sales in the US and around 10 per cent of the firm’s total sales. Imitrex, however, is not made in any of these manufacturing units.
Ranbaxy, however has fared fairly well in markets such as Russia, Ukraine and Brazil. That helped push up the net consolidated sales for the September 2008 quarter by 14 per cent to Rs 1,888 crore. However, the operating profit margin dipped by 820 basis points to 7.6 per cent and forex losses amounted to Rs 309 crore.
Even after adjusting for exceptional items, the net profit saw a decline of 82 per cent to Rs 20 crore. Analysts have pencilled a growth of about 14 per cent in 2008 over the Rs 6,648 crore earned in 2007. Should the firm have better luck with approvals, 2009 could be a better year, though potential losses from foreign exchange movements, are cause for concern.
