New Delhi: Ranbaxy Laboratories, India's top drug maker by sales, beat forecasts on Tuesday with a 7 per cent rise in profit, helped by sales of generic drugs, and forecast improved performance over the rest of the year.
Ranbaxy also said it had built up a 14.7 percent stake in Orchid Chemicals and Pharmaceuticals through a subsidiary.
Chief Executive Malvinder Singh declined to comment on whether Ranbaxy would increase its stake.
"On a macro point, I see more alliances happening, consolidation happening. Partnership is one way, acquisition is another driver, and Ranbaxy is active in both," Singh told reporters. Singh said the company could finalise a strategic alliance for drug discovery next month.
"Following a good start to the year, we expect business to ramp up even further as we move through the successive quarters," Singh said, maintaining guidance for a 20-25 percent profit growth and 18-20 per cent revenue growth for 2008. But shares in Ranbaxy, valued at $4.7 billion, ended down 2.4 per cent at 487.15 rupees in a Mumbai market that gained 0.3 per cent, as sales were below some analysts' forecasts.
New Delhi-based Ranbaxy has grown internationally by selling generics, cheap copies of branded drugs off-patent, or by successfully challenging the patents held by western firms. Singh said a US patent settlement reached with AstraZeneca Plc last week over the Anglo-Swedish drugmaker's top-selling ulcer pill Nexium would add revenues of between $1.25 billion and $1.5 billion between 2009 and 2014.
Under the deal, Ranbaxy will start selling a cheap version of Nexium, which had sales of $5.2 billion in 2007, on May 27, 2014, and will be the exclusive distributor for the first six months. Ranbaxy can also formulate a portion of AstraZeneca's US supply of Nexium from May 2010, with the active ingredient in the drug, esomeprazole magnesium, being made from May 2009.
"Among the large cap companies, this is one company which has very good revenue visibility," said Sarabjit Kaur Nangra, a sector analyst with Angel Broking, which has an "accumulate" rating on the stock. "They have diversified very well in different markets and that should help them in the years ahead."
Ranbaxy said sales in North America grew 20 percent to $110 million in the March quarter from a year ago, while Asia Pacific and CIS posted a rise of 22 percent to $140 million, led by emerging markets such as India, the Middle East and China. Ranbaxy, which aims to be among the world's top five generic drug makers with $5 billion in annual sales by 2012, said consolidated net profit rose to 1.53 billion rupees ($39 million) in the March quarter from 1.43 billion rupees a year ago.
That did not take into account 205 million rupees spent on drug discovery research in the March quarter as Ranbaxy is in the process of spinning off its research unit, with a public offer expected in the second half of the year. Consolidated sales were 16.23 billion rupees in the quarter, up from 15.64 billion reported a year earlier.
A Reuters poll had forecast Ranbaxy's earnings to rise 2.3 per cent to 1.32 billion rupees on net sales of 17.96 billion. Ranbaxy shares rose 3 per cent during the March quarter, outperforming a 23 per cent fall in the benchmark index.
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