For the quarter ended March, drug maker Ranbaxy Laboratories' consolidated net profit fell 90 per cent year-on-year to Rs 125.8 crore, primarily owing to a high base in the corresponding quarter last year, when net profit stood at Rs 1,247 crore. Also, the company didn't see any major upside, as was the case in the year-ago period, when exclusive sales of the generic version of Lipitor in the US had aided the company to a large extent.
Net sales declined 34.2 per cent to Rs 2,440 crore, against Rs 3,709 crore in the corresponding period of 2012. After the results for the quarter ended March were announced, the Ranbaxy stock fell, closing at Rs 443.8 on the BSE, a fall of 2.8 per cent.
During the quarter ended March 2012, Ranbaxy had gained from exclusive sales of the generic version of Lipitor and the authorised generic of Pfizer's blood pressure- and cholesterol-lowering drug Caduet in the US, and this had contributed to the company's revenues during that period. Ranbaxy, which launched the generic version of Lipitor in the US in December 2011, is estimated to have earned $600 million through its sales in the six-month exclusivity period ended May 2012.
However, in the quarter ended this March, the company saw no such benefits. It also recorded a fall in the market share of the Lipitor generic, as well as supply disruptions of the drug from November 2012 - the company had voluntarily recalled a few batches of the Lipitor generic from the US market after it suspected foreign substances (glass particles less than 1 mm in size) were present in select batches.
According to analyst estimates, after the recall, the share of the Lipitor generic in the US market fell from 42.1 per cent to two per cent.
Ranbaxy, which earlier manufactured and supplied the Lipitor generic drug to the US from two of its facilities---US-based Ohm Laboratories and its new unit in Mohali, Punjab---is yet to resume supplies from the Indian unit. In February this year, the company restored the supplies of the Lipitor generic from Ohm Laboratories to the US.
During the quarter ended March, Ranbaxy registered sales of Rs 595.6 crore in the US. In a post-earnings conference call, Ranbaxy chief executive and managing director Arun Sawhney told analysts the company was "confident of regaining market share" for the drug in the US. He added from now, the company was likely to see improvement in its margins every six months.
The company's results disappointed the Street, as most felt these didn't reflect its performance. Investors were also concerned about the lack of clarity on the resumption of Lipitor generic supplies from the company's Mohali unit and on the resolution of pending issues with the US Food and Drug Administration.
"Ranbaxy Labs numbers were below expectations. While on the sales front, it reported de-growth, this was on back of the base impact. However, on a like-to-like basis, it posted double-digit growth. The main disappointment was on the operating profit margin front, which stood at six per cent, much below our expectations of 10 per cent," said Sarabjit Kour Nangra, vice-president (research), Angel Broking.
However, Ranbaxy's base business sales saw double-digit improvement over the year-ago period. Sales in the major emerging markets of India, Africa, east Europe and the Commonwealth of Independent States (CIS) increased. In India, sales rose 11 per cent year-on-year to Rs 542.7 crore. "India and key emerging markets of east Europe, CIS, Africa and West Asia returned strong growth. The focus on differentiated products gained momentum during the quarter, as we improved our market share in Absorica and received the rights to market desevenlafaxine in the US. We also continued to work towards optimising overhead and other expenses," Sawhney said.
During the quarter, the company filed three generic drug applications in the US. It expects to secure 180 days of exclusive marketing rights for two of these drugs.