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| Ranbaxy Labs: Growth strategy fructifies |
| Priya Kansara Pandya & Akash Joshi / Mumbai May 12, 2010, 00:39 IST |
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 The mid-term business plan intends to create a revenue push for the pharma major.
India’s leading pharmaceutical company, Ranbaxy Labs, has recorded a strong March 2010 quarter. Initiatives undertaken by the management to develop the US market and a systematic approach followed to penetrate the Indian markets seem to be generating results, reckon analysts.
At a constant currency rate, revenues for the quarter ended March were at Rs 2,490.20, growing 65 per cent over the year-ago period. The company has recorded a net profit of Rs 963.10 crore, as against a loss in the previous year. While foreign exchange earnings, to the tune of Rs 319.47 crore, added to the profits, operational earnings before interest, tax, depreciation and amortisation (Ebitda) rose to 42 per cent from 24 per cent during the previous quarter.
A strong performance by Valacyclovir, a first-to-file (FTF) product launched in November 2009, was the major contributor. Revenues in the US grew 266 per cent to touch $251 million (Rs 1,151.5 crore). However, analysts reckon that this was a one-off windfall. The US Food and Drug Administration (USFDA) allows 180 days of exclusive marketing rights to the first company that successfully challenges a patent on a medicine. Prices tend to fall as the exclusivity period gets over. The period will end in May 2010. The revenue growth is expected to normalise in the days to come.
The mid-term plan rolled out by Daiichi Sankyo intends to see 20 per cent growth in the next few years. It has a decent pipeline with six FTF products to be launched. Analysts also look forward to the Viraat project, with which the management intends to penetrate into the Indian market. The company has recruited around 1,500 medical representatives, taking the number to 4,000, with a 6.5 per cent market share in the urban market. This could have an impact on the employee and selling costs.
Cost of sales are already rising from 50 per cent levels in the previous year to 65-70 per cent level at present. The management’s ability to maintain revenue growth through increased penetration and widening of the therapeutic range will absorb the higher costs. The resolution of the USFDA issues regarding manufacturing facilities at Dewas and Paonta Sahib will also provide an upside to the company’s share price.
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