Ranbaxy posts loss as currency and FDA ban still hurts

Ranbaxy has reported a net loss of 7.61 billion rupees, or $153 million, for the first quarter, down from income of 1.4 billion rupees in the like, year-earlier period.

The Indian drugmaker says that earnings were hurt by a number of factors, including “poor monetary conditions” and the devaluation of several currencies in countries where the company operates. The figures also reflected the effects of a US import ban placed on 30 of Ranbaxy’s generics.

The US Food and Drug Administration imposed the ban last September over "ongoing procedural violations in manufacturing" at Ranbaxy’s Dewas and Paonta Sahib facilities not long after claims were made that the Gurgaon-based firm had falsified data on treatments that were eventually approved. These claims have been denied by the company.

Group sales declined 4% to 15.58 billion rupees, below analysts' estimates, while turnover in the USA fell 14% to 3.40 billion rupees. Sales in Europe were also down 14% to 2.83 billion rupees “on account of difficult and uncertain market conditions”, plus currency devaluation and destocking affecting demand.

Emerging markets, which accounted for 54% of global sales, came in at 8.38 billion rupees, down 2%. Growth was led by strong performances in India, Africa and Russia and on the firm’s home turf, revenues were up 9% to 3.26 billion rupees. The company maintained its number two ranking in the Indian pharmaceutical sector with a 4.8% market share.

Chief executive Malvinder Singh said that the quarter “has been challenging for the global economy and also the pharmaceutical industry with depreciation in several currencies and a downturn in demand and liquidity affecting performance”. He claimed that “our diversified market base has helped us deal with these issues, mitigating their impact to a large extent”.

Mr Singh also said that synergies from the company’s relationship with Daiichi Sankyo, which recently acquired a 63.9% stake in the firm, “are starting to kick in”. He added that Ranbaxy has recently launched the Japanese drugmaker’s antihypertensive olmesartan in India as Olvance, and more launches are set to follow.

For 2009, Ranbaxy has forecast a net loss of 8 billion rupees on sales of 70 billion rupees, dependant on a reasonable currency rate and no further impact from the FDA’s actions.