Ranbaxy Reports Quarterly Loss Ahead of Sun Pharma DealKetaki Gokhale
Ranbaxy Laboratories Ltd., the drugmaker being acquired by Sun Pharmaceutical Industries Ltd., posted a quarterly loss after finance costs rose and the U.S. banned imports from its Punjab factory.
Gurgaon-based Ranbaxy reported a loss of 736.5 million rupees ($12.3 million) in the three months ended March compared with a profit of 1.26 billion rupees a year earlier, according to a company statement to the stock exchange today.
With import bans on four of its Indian facilities and increased regulatory compliance costs, Ranbaxy’s challenge is to raise profitability which lags behind rivals including Dr. Reddy’s Laboratories Ltd. The latest ban came in January when Ranbaxy’s pharmaceutical ingredient manufacturing facility in Toansa, Punjab, was banned from supplying to the U.S.
“The top line is a big miss,” as the difficulties at Toansa “hit their business across geographies,” said Prakash Agarwal, an analyst at CIMB Securities India Pvt. in Mumbai.
The company said it has put aside a provision of 2.7 billion rupees as it deals with the Toansa ban. Ranbaxy has received a subpoena from the U.S. Attorney for the District of New Jersey requesting documents on the Toansa factory.
During an inspection before the ban, U.S. Food and Drug Administration inspectors found that the facility’s quality control and microbiology labs were in significant disrepair with uncloseable windows and broken equipment. Inspectors found “too numerous to count flies” in the sample preparation room.
Finding ingredient sources to manufacture copies of Novartis AG’s heart drug Diovan, AstraZeneca Plc’s Nexium acid-reflux pill and Roche Holding AG’s Valcyte antiviral are particularly important for the company. Ranbaxy has tentative FDA approvals for all three, and since it was first to file its applications, the company would get a lucrative six months of marketing exclusivity after introduction.
Finance costs, which include expenses related to foreign currency borrowing, rose to 1.14 billion rupees in the quarter from 525.2 million rupees a year earlier. Net sales rose 1.2 percent to 24.4 billion rupees in the quarter, from 24.1 billion rupees a year earlier.
Sales of bulk pharmaceutical ingredients in the quarter plunged 67 percent to 600 million rupees, from 1.82 billion a year earlier, based on comparisons with the year-earlier statement.
A unit of Japan’s Daiichi Sankyo Co., Ranbaxy’s products include a generic version of Pfizer Inc.’s cholesterol-lowering drug Lipitor. It also sells the acne medicine Absorica.
Last year, Ranbaxy agreed to pay $500 million to settle a whistleblower lawsuit and federal criminal charges that the company sold adulterated drugs while lying about it to the U.S. Food and Drug Administration. Ranbaxy shares closed 1.3 percent to 463.55 rupees in Mumbai trading today.