It is but a pale shadow of the Ranbaxy of yore that came through as the drug-maker gave a muted guidance on its prospects for the year ahead.

The ghost of its regulatory problems with the United States Food and Drug Administration (USFDA) still remains to be exorcised, and linked to this are prospects for other products to be launched in the US market from Ranbaxy, owned by Japanese drug-maker Daiichi Sankyo.

High-profile exits from the top management, including the then Managing Director, Mr Atul Sobti, last year, a lack of clarity on how US FDA issues will be resolved, and a lack of direction on the launch of the generic version of cholesterol drug Lipitor, have collaborated to hammer down expectations from the company. A far cry from expectations of the aggressive home-spun company that has, in the past, taken the competition to into the backyard of the multinationals.

Transition pangs

The company is feeling the pangs of transition and is being “multi-managed”, said a source familiar with Ranbaxy and its developments, after it was acquired by Daiichi Sankyo in 2008.

It will be another three to five years before Daiichi Sankyo's plans for Ranbaxy shone through — whether Ranbaxy will be leveraged for its generic strengths or be reduced to merely carrying out a script written by its Japanese parent, the source observed.

In the first six months of 2011, there should be some indication on drugs where Ranbaxy is the first-to-file (FTF) to launch in the US market, besides prospects on generic Lipitor.

Dismal performance

At a projection of sales at $1.87 billion for 2011, the guidance was flat, domestic growth is less than the industry, and the launch of generic Aricept saw a 70 per cent price erosion in the US, Mr Ranjit Kapadia, HDFC Securities' Vice-President (Institutional Research), said of Ranbaxy's dismal last quarter.

“The uncertainty on the timeline of the composite resolution of US FDA and DOJ (Department of Justice) issue, which was expected by the end of 2010, still persists,” observed Ms Sarabjit Kour Nangra of Angel Broking.

The company posted a Rs 95-crore loss in the quarter under review as compared to a Rs 255-crore profit in the same period last year. “The company provided for impairment charges of Rs 181.5 crore due to the business assessment done in France. This led to increased depreciation cost of Rs 284.5 crore (Rs 73.9 crore), an Angel Broking report said. Also, Ranbaxy made a provision of Rs 222 crore for diminution in the value of investment held in Zenotech Labs and Shimal Research Laboratories, the report added. And the net effect of all this was, Ranbaxy shares closed down about seven per cent at Rs 461 on the BSE on Wednesday.

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