Ranbaxy Labs reports net profit of Rs 116 cr

India’s biggest drug maker, Ranbaxy Laboratories, has posted a net profit of Rs 116.6 crore for its third quarter ended September, against a net loss of Rs 394.5 crore in the same period last year, which had been largely attributed to mark-to-market exchange losses.

This is the second straight quarter of net profits for Ranbaxy after three in which it had recorded losses, as it cut costs and increased sales in select markets. Mark-to-market (revaluing assets to reflect their current value) write-downs and a steep drop in sales in the US had resulted in Ranbaxy declaring a net loss during the three quarters that preceded the one ending June 2009.

During the September quarter, the company posted a revenue of Rs 1,720.5 crore, 18 per cent lower than the Rs 1,884 crore registered during the same quarter last year.

According to Ranbaxy Chief Executive Atul Sobti, improved sales in emerging markets and focus on cost efficiency led the company on the path to recovery. While the company’s sales in the emerging markets of Asia, Europe, Latin America and Africa were steady at Rs 1,067.8 crore, its sales in developed markets declined by 30 per cent to Rs 525.7 crore due to the 53 per cent drop in US revenues.

“Ranbaxy’s US concerns are far from over. The approvals for its two manufacturing facilities (from the Food & Drugs Administration, the regulator) will take several months. The only positive factor is the reduction in the general administration expenses, which have come down by 28 per cent, primarily due to the head count reduction in the UK and closing of one manufacturing facility in Romania,” said Ranjit Kapadia from HDFC Securities.

The US FDA had banned import of 30 medicines from Ranbaxy’s manufacturing facilities at Poanta Sahib (in Himachal Pradesh) and Dewas (in Madhya Pradesh). The company said it was cooperating with USFDA to clear the hurdle. It has also attempted to get the latter’s clearance for its new manufacturing facility at Mohali (Punjab). Sobti said the company was seeing greater traction with its Japanese parent, Daiichi Sankyo, in building a stronger future.

South Africa was one of the markets which saw a strong 34 per cent growth in sales to Rs 108.2 crore. Canada saw a 14 per cent increase in sales during the quarter to Rs 81.7 crore. Europe (including Romania), however, recorded sales of Rs 326.5 crore, a decline of 10 per cent.

In Romania, though Ranbaxy maintained its lead ranking in the generics and OTC segment with a market share of 12.9 per cent, sales for the quarter, at Rs. 83.8 crore, were down 25 per cent due to disruption in trade arising out of new pricing regulations that affected the generics industry, and severe liquidity crunch in the trade channels, the company said.

Asia, West Asia and CIS region recorded sales of Rs 634.6 crore during the quarter, almost at similar levels as the corresponding quarter the previous year. In India, sales (excluding its consumer healthcare business) grew by two per cent to Rs 361.7 crore during the quarter. The CIS region recorded sales of Rs. 111.9 crore during the quarter, lower by 14 per cent.

Ranbaxy’s share price closed at 2.59 per cent up, at Rs 381.90, at the Bombay Stock Exchange on Monday.