Ranbaxy posts loss on provision for US settlement
Generic drugmaker Ranbaxy Laboratories Ltd posted a net loss for the quarter to end-June after making a provision related to 'ongoing settlement discussions' with US government authorities.business Updated: Jul 29, 2014 21:14 IST
Generic drugmaker Ranbaxy Laboratories Ltd posted a net loss for the quarter to end-June after making a provision related to "ongoing settlement discussions" with US government authorities.
The company, which has agreed to be acquired by rival Sun Pharmaceutical Industries Ltd did not disclose the details of the discussions, saying it would be able to give details once the case has been settled.
Last year, Ranbaxy pleaded guilty to felony charges related to drug safety and agreed to pay $500 million in civil and criminal fines under a settlement agreement with the US Department of Justice.
The company has also been slapped with a slew of regulatory sanctions in the past year due to violations of standard drug manufacturing practices at its India plants, hitting its sales in the United States and Europe, its primary export markets.
Ranbaxy's net loss in April-June was at 1.86 billion rupees ($30.9 million) as it made a one-time settlement provision of 2.4 billion rupees. Analysts had expected it to post a profit of 698 million rupees, according to Thomson Reuters data.
The figure compared with a loss of 5.24 billion rupees in the year-earlier quarter, when it was hit by losses from foreign exchange transactions and goodwill booked at overseas units.
Net sales dropped 8% in the quarter to 23.72 billion rupees, including an 11% fall in sales in the United States, where it was hit by a spate of rebukes by the Food and Drug Administration (FDA).
The FDA has banned all of Ranbaxy's India-based plants under a wider scrutiny of India's $15 billion pharmaceutical industry, which is the largest supplier of medicines to the United States.
Ranbaxy's US business prospects have recently improved, however, after it received FDA approval to launch a cheaper copy of Novartis AG's blood pressure pill Diovan last month.
"We continue to work towards growing our base business with focus on emerging markets, while at the same time, restoring the business on growth trajectory in our traditional markets such as the USA and Europe," Chief Executive Arun Sawhney said in a statement.
Ranbaxy was the first company to file for FDA approval to launch generic versions of two other top-selling drugs - AstraZeneca Plc's blockbuster heartburn drug Nexium and Roche's antiviral Valcyte.
They are pending final approval from the FDA.
"We believe we have the exclusivity, and we will launch the products once we get the approvals from the FDA," Sawhney said.
The first drugmaker to launch a copy of a patented drug in the United States is usually entitled to six months of exclusivity to sell it, providing a big boost to earnings before rivals launch their generic versions.
In India, the company expects a government decision to cap the prices of more than 100 drugs used to treat diseases ranging from diabetes to HIV will hit its revenue by 1.2 to 1.5%, he said.
Sun Pharmaceutical, a bellwether in India's pharmaceutical industry, agreed in April to buy Ranbaxy from Japan's Daiichi Sankyo Ltd for $3.2 billion, creating the world's fifth-largest maker of generic drugs. The Mumbai stock markets were closed on Tuesday for a public holiday.
($1 = 60.1150 Indian rupees)