Japan's Daiichi says deep in red due to Ranbaxy deal
Japanese drugmaker Daiichi Sankyo said it lost 335.8 billion yen ($3.45 billion) in the year to March because of a plunge in the value of its investment in India's Ranbaxy Laboratories.business Updated: May 12, 2009 10:59 IST
Japanese drugmaker Daiichi Sankyo said on Tuesday it lost 335.8 billion yen ($3.45 billion) in the year to March because of a plunge in the value of its investment in India's Ranbaxy Laboratories.
It booked a loss of 351.3 billion yen on the Ranbaxy shares, which have fallen more than two-thirds since June when Daiichi announced it would buy 64 per cent of India's top generic drugmaker for up to $4.6 billion.
The previous year Daiichi, Japan's third largest drugmaker, had logged a net profit of 97.66 billion yen.
Ranbaxy shares have slumped due to weak global markets, financial losses reported by the Indian company and regulatory setbacks in the United States, the world's biggest drug market.
Ranbaxy, which derives 80 per cent of its sales from abroad, has grown by selling cheap copies of branded drugs that have gone off-patent and through successful challenges to patents owned by Western companies.
But the US Food and Drug Administration (FDA) last September banned imports of more than 30 generic drugs produced by Ranbaxy because of problems in their production at two plants in India.
"If the resolution of this issue were to become protracted or the FDA imposed additional restrictions on Ranbaxy, this could have a severe impact on Ranbaxy's business prospects in the US market," Daiichi warned in a statement.
The Japanese company expects to return to the black in the current business year to March with a net profit of 40 billion yen.
But it said the global market environment would remain harsh due to the economic downturn and government restrictions on medical spending.