Ranbaxy Laboratories Ltd (updated - 12 May 2010)
India’s leading pharmaceutical company, Ranbaxy Labs, has recorded astrong March 2010 quarter. Initiatives undertaken by the management to develop the US market and a systematic approach followed to penetrate the Indian markets seem to be generating results, reckon analysts.
At a constant currency rate, revenues for the quarter ended March were at Rs 2,490.20, growing 65 per cent over the year-ago period. The company has recorded a net profit of Rs 963.10 crore, as against aloss in the previous year. While foreign exchange earnings, to the tune of Rs 319.47 crore, added to the profits, operational earnings before interest, tax, depreciation and amortisation (Ebitda) rose to 42 per cent from 24 per cent during the previous quarter.
Ranbaxy Laboratories Ltd (updated - 02 Mar 2010)
Ranbaxy’s stock has done better than the broader market in the last two trading sessions, having risen 5.6 per cent as against the Sensex’s 3.2 per cent gain. The increase can be attributed to the better-than-expected December 2009 quarter results, announced afew minutes before market closing on February 25 (last Thursday).
The company’s consolidated revenues jumped 25 per cent year-on-year to Rs 2,269 crore on the back of exclusivity sales of anti-viral drug valacyclovir and anticonvulsant oxcarbazepine suspension and adecent show in some key markets. North America, which accounts for 37 per cent of consolidated revenues, saw sales grow 68 per cent to Rs 833 crore. Analysts estimate about half of this is likely to have come from valacyclovir.
While there was pressure on its European business, the Indian business grew 6per cent to Rs 333 crore led by robust growth of top brands. The CIS business also saw a growth of 8 per cent year-onyear to Rs 145 crore for the quarter.
Operating profit margins were at 18.5 per cent for the quarter (vis-ŕ-vis losses in last year’s quarter) due to valacyclovir and cost cutting efforts (including closure of units). Higher operating profits and oneoffs (forex gains, divestments, deferred tax) saw the company report net profits of Rs 262 crore compared with a loss of Rs 679 crore. Had it not been for the high tax rate (about 72 per cent) due to accounting treatment, net profits would have been higher.
For CY2010, the company has guided for sales of Rs 7,800 crore, a growth of 6per cent over CY2009 sales figure of Rs 7,340 crore and net profit of Rs 460 crore as against Rs 310 crore in CY2009. Analysts believe the guidance is below estimates due to delay in supply of Nexium (API/formulation) to Astra Zeneca, higher sales of valacyclovir in the December quarter and weakness in US sales.
However, the biggest trigger for the stock will be the resolution of the import ban placed on its facilities last year. The Dewas plant may get approval ahead of Paonta Sahib and the company expects to address these issues within the current year. While short-term triggers include the announcement in April of a synergy plan with its Japanese parent Daichi Sankyo, the stock at Rs 479, is trading at 21.7 times its CY11 estimated EPS of Rs 22 and there is little room for upsides.
source - BS
A strong performance by Valacyclovir, a first-to-file (FTF) product launched in November 2009, was the major contributor. Revenues in the US grew 266 per cent to touch $251 million (Rs 1,151.5 crore). However, analysts reckon that this was a one-off windfall. The US Food and Drug Administration (USFDA) allows 180 days of exclusive marketing rights to the first company that successfully challenges a patent on a medicine. Prices tend to fall as the exclusivity period gets over. The period will end in May 2010. The revenue growth is expected to normalise in the days to come.
The mid-term plan rolled out by Daiichi Sankyo intends to see 20 per cent growth in the next few years. It has a decent pipeline with six FTF products to be launched. Analysts also look forward to the Viraat project, with which the management intends to penetrate into the Indian market. The company has recruited around 1,500 medical representatives, taking the number to 4,000, with a 6.5 per cent market share in the urban market. This could have an impact on the employee and selling costs.
Cost of sales are already rising from 50 per cent levels in the previous year to 65-70 per cent level at present. The management’s ability to maintain revenue growth through increased penetration and widening of the therapeutic range will absorb the higher costs. The resolution of the USFDA issues regarding manufacturing facilities at Dewas and Paonta Sahib will also provide an upside to the company’s share price.
source - business standard
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Ranbaxy Laboratories Ltd (updated - 13 Aug 2010)
The quarter of rather ordinary earnings should not recur in the future.
But, for the moment, there is some pain to bear. This time around, in the June quarter, Ranbaxy Labs earnings saw adecline of 48.2 per cent at Rs 332 crore, from the Rs 693.1 crore in the same period of the previous financial year. The management clarified that this was due to the Rs 325-crore loss in foreign exchange transactions. Moreover, in the previous quarter, the company saw some earnings on the foreign exchange front. Hence, the earnings fall looks high.
On the revenue front, sales from the US market provided some solace and the overall consolidated revenues showed a healthy 24.45 per cent growth to touch Rs 2,102.9 crore, against Rs 1,795.3 crore. The US markets, thanks to Valacyclovir, saw revenues grow 162 per cent. Domestic market revenues were flat at Rs 448.7 crore and emerging markets recorded sales growth of just six per cent.
However, this could change in the future as the company would be looking to concentrate on the generics business in India and overseas, and the earnings before interest, tax, depreciation and amortisation (Ebitda) would improve due to the discovery-led research unit of its research and development (R&D) department being merged with Daiichi Sankyo India Pharma.
According to analysts, Ranbaxy spends around six per cent of its sales on R&D. Of this, 20-25 per cent is spent on discovery-led R&D.
In 2009, the company incurred $22 million on new chemical entity (NCE) research out of atotal R&D expenditure of $108 million. The expectation now is for a 20-25 per cent savings in the overall R&D spending, post the hiveoff. This would improve the Ebitda margin by 100 basis points on an annual basis by the financial year 2012.
However, the full benefit of a lower R&D cost would be reflected in the net profit as NCE-based R&D expenses would have attracted 200 per cent tax-benefit. The earnings are expected to grow as synergies between Ranbaxy and Daiichi Sankyo increase. At least, this is what analysts are looking out for.
source - business standard
