Ranbaxy’s consolidated operating profit grew fourfold to over ₹807 crore in the September quarter, from about ₹200 crore a year ago. This was helped by strong growth in the US (over 80 per cent), following the launch of the generic version of Novartis’ hypertension drug Diovan in June.
This more than compensated for the weakness in the base business in the US. The US business was hit by cessation of active ingredient supplies from its Toansa plant in India due to regulatory issues. Being the first company to file for a generic version of this drug, Ranbaxy will be the only generic player for a period of 160 days. Diovan sales should provide a leg-up to the company’s profitability in the December quarter, too, as this is a high margin product. Ranbaxy’s market share in Diovan was 32 per cent in the US.
Healthy growth in its acne-drug Absorica’s sales also helped the company’s performance in the US. Absorica currently holds 20 per cent share of the market.
Despite higher research and development spend and remediation expenses to settle the ongoing issues with the US drug regulator, the company’s overall profitability (excluding one-offs such as Diovan), remained steady during the quarter due to concerted cost rationalisation efforts.
In addition to a strong operating performance, a favourable currency helped Ranbaxy narrow its losses on foreign currency derivatives.
Depreciation of the rupee against the US dollar to about ₹61.9 by end-September, compared with ₹60 levels as of June-end, enabled the company reduce its marked-to-market losses on foreign currency derivatives from ₹302 crore in September 2013 to about ₹22 crore this year. As a result, Ranbaxy clocked ₹478 crore profit for the quarter, compared with a ₹454 crore loss during the same period last year.