Ranbaxy incurs Rs.49 million loss in third quarter (Lead)

October 31st, 2008 - 9:06 pm ICT by IANS  

Gurgaon, Oct 31 (IANS) India’s largest drug maker Ranbaxy Laboratories posted a global operating loss after tax of Rs.49 million ($1.12 million) in the third quarter ended Sept 30, down 103 percent from an operating profit of Rs.1.62 billion ($37 million) that the company earned in the comparable period last year, top company officials said here Friday.The figure excludes foreign exchange gains/losses and gains/losses on translation and exceptional items. The loss was mainly due to the continuing import ban in the US on the company’s products produced at its Dewas and Batamandi plants in India and unprecedented forex movement.

“These forex losses were despite hedging and are, therefore, included in the operating loss figure,” said Ranbaxy’s chief executive officer and managing director Malvinder Mohan Singh.

The net loss figure after accounting for foreign exchange loses and losses on translation and exceptional items stood at Rs.3.95 billion ($90.1 million), 252.4 percent in the red after a profit of Rs.6.02 billion ($137.4 million) in the corresponding period last year.

Singh said that the company suffered $73 million dollars as translation loss. It had also written down $59 million as inventory loss arising from the ban on exports to the US of the company’s products produced at its Dewas and Batamandi plants in India as a measure of caution and greater transparency.

“The US import ban and forex fluctuations has certainly impacted our financials and will do so in the fourth quarter also,” he said.

He, however, emphasised that the growth momentum for Ranbaxy’s products was strong and apart from lower than expected performance in the US and European markets, there was strong sales growth of 20 percent in emerging markets and 9 percent growth in developed markets.

The company’s global sales grew 14.3 percent during the quarter to Rs.18.88 billion ($420 million) up from Rs.16.52 billion ($367 million) that the company posted in the comparable period of last year, he said.

In the US market, the company had a negative growth in sales of 7 percent, Singh said.

Singh said the US Department of Justice (DOJ) has withdrawn the motion against Ranbaxy after the company provided a comprehensive set of audit documents.

Similarly, the US Federal Drug Administration (FDA), which had issued two warning letters and an import alert for drugs produced in the company’s Dewas and Batamandi plants, has also concluded after testing and review that there is no reason to question the safety or effectiveness of Ranbaxy’s drugs.

He said this was further substantiated by the fact that the FDA has strongly advised US consumers to continue using medication manufactured by Ranbaxy as there is no evidence of harm being caused to the patients.

He said the company was working aggresively and closely with the FDA to resolve the outstanding issues and get the import ban lifted as early as possible.

“We continue to cooperate closely with the US authorities and remain positive that outstanding issues will be resolved,” he said.

On the positive front, Singh said Ranbaxy was close to completing the landmark deal with Daiichi Sankyo and at present the company had become a 52.5 percent subsidiary of the Japanese drug major.

Daiichi Sankyo has acquired Ranbaxy shares under open offer, allotment of shares on preferential basis and acquisition of shares from Singh and his family who are the existing promoters.

As a consequence of the preferential shares allotment to Daiichi Sankyo, Ranbaxy had received Rs.35.85 billion and the company’s net worth has gone up from about Rs.28 billion to about Rs.63.85 billion.

The book value of its shares has also gone up from Rs.75 to Rs.160, Singh said.

Singh further said that the money received from Daiichi Sankyo will be used to fund growth, make further acquisitions, reduce debt and tap global opportunities.

He said Ranbaxy is also looking at expanding its manufacturing capacity in the US and acquiring other manufacturing assets to enhance its production in the US. It was also evaluating acquisition opportunities in India and elsewhere in the world.

Singh also revealed that the drug maker has obtained approval from the Drug Controller General Of India (DGCI) to initiate phase three of human clinical trials in India for its new anti-malaria combination molecule - Arterolane Maleate in combination with Piperaquine Phosphate.

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