Bloomberg News

Ranbaxy Reports $606 Million Loss After U.S. Settlement

February 23, 2012

A 40 mg tablet of Ranbaxy Laboratories Ltd.'s Storvas, a generic version of Lipitor. Photographer: Scott Eells/Bloomberg

A 40 mg tablet of Ranbaxy Laboratories Ltd.'s Storvas, a generic version of Lipitor. Photographer: Scott Eells/Bloomberg

Ranbaxy Laboratories Ltd. (RBXY), India’s largest drugmaker, reported its biggest ever quarterly loss after the company took a $500 million charge to settle a legal dispute with U.S. authorities in December.

The loss widened to 29.8 billion rupees ($608 million) in the fourth quarter, from 974.8 million rupees a year earlier, Ranbaxy said. Sales rose 79 percent to 37.4 billion rupees, helped partly by exclusive sales in the U.S. of generic Lipitor, which the Indian company began selling in November.

The December settlement relates to accusations by the U.S. Food and Drug Administration and the Department of Justice of manufacturing problems and fraudulent testing. The settlement and provision bring “greater predictability to our business in the U.S., one of our largest markets,” Chief Executive Officer Arun Sawhney said yesterday.

U.S. sales more than tripled to 19.7 billion rupees in the fourth quarter, the company said. Sales were largely boosted by the introduction of the generic Lipitor in partnership with Teva Pharmaceutical Industries Ltd. (TEVA) Under the terms of the deal, Petach Tikva, Israel-based Teva would get a share of the profits from the first six months of sales.

“The Lipitor numbers look pretty good, but the payment to Teva is very high,” Nitin Agarwal, a Mumbai-based analyst at IDFC Securities Ltd., said in a telephone interview.

Teva Payment

Ranbaxy didn’t disclose the amount paid to Teva citing agreement terms. Still, other operating expenses, which include profit-sharing related contractual payments, more than doubled to 14.4 billion rupees from a year earlier, it said.

Ranbaxy fell 0.9 percent to 436.25 rupees as of 9:43 a.m. in Mumbai, while the benchmark Sensitive Index slid 0.1 percent.

The drugmaker expects to achieve $2.2 billion in revenue this year, without including any generic drug sales where it has exclusivity rights, it said in the statement.

“The guidance from the company is quite strong,” said Priti Arora, an analyst at Kotak Institutional Equities in Mumbai. “I think the figure is pretty ambitious and may be difficult to achieve,” she said.

The company is satisfied with the progress it’s making in resolving long-standing issues with the U.S. regulators, Sawhney said in the statement. The FDA imposed a temporary ban on more than 30 generic drugs made at the Indian drugmaker’s Paonta Sahib and Dewas plants in September 2008, three months after Tokyo-based Daiichi Sankyo Co. (4568) agreed to buy a controlling stake.

Daiichi Sankyo fell 0.6 percent to 1,458 yen as of 1:17 p.m. in Tokyo trading.

A slump in the rupee increased Ranbaxy’s cost of hedging, a tool companies use to protect against price swings. The rupee dipped 7.7 percent against the dollar in the three months ended Dec. 30, and was the worst performer among major Asian currencies tracked by Bloomberg. Ranbaxy’s foreign-exchange losses related to derivatives totaled 8.4 billion rupees during the same period.

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Lena Lee at llee42@bloomberg.net


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