Ranbaxy's net profit increases 53% to Rs 7901mn

The Board of Directors of Ranbaxy Laboratories Limited (Ranbaxy) at their meeting held today took on record the un-audited standalone results for the quarter (Q4) and the year ended December 31, 2007.

Key Financial & Operational Achievements for the Year 2007

• Consolidated Revenues at USD 1607 Mn, a growth of 20%.
• Net Profit at USD 191 Mn, a growth of 68%. In rupee terms Net Profit stood at Rs. 7,901 Mn, up 53%. Excluding foreign exchange gains / losses on translation and extraordinary items, Net Profit for the year was at Rs 6,069 Mn, +15%. Similarly, in USD terms Net Profit was at USD 147 Mn, + 28%.
• Earnings before Interest, Depreciation, Tax & Amortization (EBIDTA) at USD 242 Mn (Rs 9,981 Mn), reflects margin to sales of 15%. Excluding foreign exchange gains / losses on translation, EBIDTA margins were at 16.5% to sales, exceeding the Company Guidance.
• Emerging markets continue their strong growth momentum; comprise 54% to global sales (2006 : 49%); register a strong growth of 32%.
• Company’s sales in USA at USD 386 Mn, a growth of 2%. Base business growth in USA was at 19% (excluding sales of First-to-File products).
• USA branded business records sales of USD 56 Mn, + 37%. Robust performance led by Company’s flagship brand Sotret, with a 51.5% market share. The Company acquires 13 dermatology brands from Bristol Myers Squibb (BMS) to add further growth momentum to its strong dermatology franchise.
• European operations witness a significant growth; record sales of USD 363 Mn, a healthy growth of 24%. Romania, Germany, UK register robust performances with France reflecting a marked improvement over the previous year.
• The India business continues to grow strongly with the Company maintaining its ranking amongst the top 2 companies in the market place with a 5.04% market share ( Source : ORG).
• Company enters the Bio-similars and Oncology segment by enhancing its equity stake in Zenotech Laboratories Ltd.; Gains access to the robust product pipeline covering approximately 1/3rd of the current bio-similars market size of USD 65 Bn.
• The Company entered into 2 independent litigation settlements with innovator companies for key FTF products i.e. Valacyclovir with GlaxoSmithKline (brand name Valtrex) & Tamsulosin with Boehringer Ingelheim / Astellas Pharma (brand name Flomax). These products have a combined market size of around USD 3 .5 Bn. The Company plans to launch these products in 2009 (Valacyclovir) & 2010 (Tamsulosin) on an exclusive basis, providing certainty of revenue flows and product visibility in the future.
• Ranbaxy signed a new multiyear R&D agreement with GlaxoSmithKline, modifying and expanding the terms of their strategic alliance established earlier. The alliance would provide Ranbaxy expanded drug-development responsibilities and further financial opportunities. Ranbaxy could receive over USD 100 Mn in potential milestone payments for a product developed by Ranbaxy and subsequently launched by GSK and up to double digit royalties on worldwide net sales.
• The Company out-licensed its novel statin for the treatment of dyslipidemia to PPD, Inc, USA, which acquired an exclusive worldwide license to develop, manufacture and market Ranbaxy’s drug.
• The Company received favorable decisions in Norway, Canada & Germany with respect to its patent challenge for the cholesterol-reducing drug, Atorvastatin. 

Key Financial & Operational Achievements for Q4 2007

·   Consolidated Revenue at USD 451 Mn, records growth of 19%.

·   Net Profit at USD 48 Mn, grew by 15%. In rupee terms, Net Profit stood at Rs. 1,878 Mn.

     Excluding foreign exchange gains / losses on translation and extraordinary items, Net Profit was at Rs 1,800 Mn, +12%, over the corresponding previous quarter. Similarly, in USD terms, Net Profit was at USD 45 Mn, a growth of 26%.

·     Earnings before Interest, Depreciation, Tax & Amortization (EBIDTA) at USD 75 Mn (Rs 2,977 Mn), reflect a margin to sales of 16.5%. Excluding foreign exchange gains/losses on translation, EBIDTA margins were at 17.0% to sales.

·     Emerging markets, constitute 54% to global sales (Q4 2006: 41%); register strong growth of 24%.

·     India, CIS, Romania, South Africa & Brazil were the key drivers of growth in the emerging markets whereas the developed markets witnessed a stronger performance from the Company’s operations in UK, Germany, France, Italy and Canada.

·     The Company announced its agreement to settle its ongoing litigation with Astellas/Boehringer Ingelheim in regards to Flomax® (Tamsulosin capsules). Under the agreement, Ranbaxy will enter the U.S. market on March 2, 2010, eight weeks prior to expiry of the pediatric exclusivity, which is likely to be granted to the innovator company. The total annual sales of Flomax are estimated to be USD 1.2 Bn (source IMS).

·     The Company won a favorable decision from the Federal Patent Court of Germany located in Munich with respect to its case against (Pfizer) Warner-Lambert’s European Patent 409 281 (281), invalidating all relevant claims of this patent.  The product has annual sales of USD 137 million (IMS – MAT:  June 2007).

·     The Company received a tentative approval for Valsartan Tablets 40/80/160/320 mg in which it has a First to File status. Total annual market sales for the product stood at USD 1.3 Bn.

Speaking on the occasion, Malvinder Mohan Singh, CEO and MD, Ranbaxy Laboratories Limited, said, "The results for the year 2007 are per our expectations. This is on the back of strong growth in our emerging markets, a significant growth of business in Europe and a strong performance in our US branded business. We have also taken appropriate steps to structure the business for the future by forming alliances in several niche therapeutic areas, enhanced product visibility and brought in certainty of profit flow for the future. I believe the coming years will see Ranbaxy emerge stronger and better positioned to achieve its goal of becoming a top five global generics company. " 

Year ended December 31, 2007 (Year 2007)

For the year, the Company recorded Sales of Rs. 66,353 Mn [USD 1,607 Mn] (2006: Rs. 60,652 Mn, USD 1339 Mn), registering a growth of 9%. Profit before finance cost, depreciation, tax and amortization was at Rs. 9,981 Mn [USD 242 Mn] (Rs.8,740 Mn, USD 193 Mn). Excluding the foreign exchange gains / losses on translation, EBITDA margins were at 16.5% to sales. Profit before tax stood at Rs. 9,971 Mn [USD 242 Mn] (Rs. 6,510 Mn, USD 144 Mn), an increase of 53%. Profit after tax excluding the foreign exchange gains/losses on translation and extraordinary items was at Rs 6,069 Mn [USD 147 Mn] (Rs 5,277 Mn, USD 115 Mn), an increase of 15%. Profit after tax was at Rs. 7,901 Mn [USD 191 Mn] (Rs. 5,153 Mn, USD 114 Mn), recording a rise of 53%.

Earnings per share on a fully diluted basis were at Rs. 15.30 (2006: Rs. 13.17).

Quarter ended December 31, 2007 (Q4)

For Q4, Ranbaxy achieved Sales of Rs. 17,951 Mn [USD 451 Mn] (2006: Rs. 17,077 Mn, USD 381 Mn). Profit before finance cost, depreciation, tax and amortization was at Rs. 2,977 Mn [USD 75 Mn] (Rs. 2,655 Mn, USD 60 Mn), reflecting an EBITDA margin of 16.5% to sales. Excluding the foreign exchange gains / losses on translation, EBITDA margins stood at 17% to sales. Profit before tax stood at Rs. 2,339 Mn [USD 59 Mn] (Rs. 2,371 Mn, USD 53 Mn). Profit after tax excluding the foreign exchange gains/losses on translation and extraordinary items was at Rs 1,800 Mn [USD 45 Mn] (Rs 1,612 Mn, USD 36 Mn), an increase of 12%. Profit after tax was at Rs. 1,878 Mn [USD 48 Mn] (Rs. 1,859 Mn, USD 42 Mn).

Earnings per share on a fully diluted basis were at Rs. 4.21 (2006: Rs. 3.36).

Global Sales

Global Sales for the year recorded a growth of 20% at USD 1607 Mn while for the quarter sales were at USD 451 Mn, an increase of 19%. The Company’s sales witnessed a shift towards the high growth and more profitable branded emerging markets.  The emerging markets during the year contributed 54% of global sales as against 49% in the previous year and recorded a robust growth of 32%. Developed markets stood at 40% of global sales and grew by 13%.  The key countries in emerging markets that contributed to performance were India, CIS, Romania, South Africa & Brazil, whereas, the developed markets were led by a much improved performance from the countries in Western Europe & Canada.

Dosage Form sales for the year stood at USD 1507 Mn, contributing 94% to global sales and recording a growth of 23% (2006 : 91% to global sales). For the quarter, dosage form sales were at USD 424 Mn, +20%.

North America

Sales in the Company’s North America operations comprising USA & Canada stood at USD 415 Mn for the year, recording a growth of 6%. For the quarter, sales were at USD 113 Mn, similar to prior year levels.

USA

USA recorded sales of USD 386 Mn for the year, a marginal growth of 2% over 2006. For the quarter, sales in USA were at USD 104 Mn. Excluding the sales of the First-to-File products, i.e. Simvastatin 80 mg and Pravastatin 80 mg in ’06 and ’07 respectively, the base business grew by 19% for the year and 8% for the quarter.

The Company’s performance in the US market was led by an all-round improvement in its key business segments of generics, branded and the OTC business. The branded business was driven by the performance of Sotret, the Company’s flagship brand that attained a market leadership position (> 51% MS). The 30 mg dosage strength of Sotret captured an impressive 68% market share. The branded segment was further strengthened with the acquisition of 13 dermatology brands from Bristol Myers Squibb (BMS), re-launched in the second half of the year.

During the quarter, the Company received final approvals from the US FDA to manufacture and market Cetrizine Hydrochloride Tablets, 5mg & 10mg and Clarithromycin for oral suspension 125mg/5ml & 250 mg/ 5 ml. Both the products have a combined market size of USD1.3 Bn. The Company also received a tentative approval for Valsartan Tablets 40/80/160/320 mg tablets in which it has a First to File status. Total annual market sales for the product stood at USD 1.3 Bn.

The Company made a total of 28 ANDA filings during the year and received 18 approvals. With this the cumulative ANDA filings stood at 239 and approvals at 141. The Company believes that it has a First to File (FTF) status on 18 products valued at innovator market size of USD 27 Bn.

Marking the Company’s entry into the Authorized Generics (AG) space, the Company acquired Isoptin SR, a dermatology product from FSC Laboratories. This enabled its entry as an AG in a difficult sustained release product with limited competition.

Canada

Sales for the year were at USD 29 Mn (+148%) and for the quarter at USD 9 Mn (+62%). The key products that contributed to growth, both for the full year and the quarter, were Fentanyl, Citalopram, Ciprofloxacin and Risperidone. The Company’s operations rank amongst the top 10 generic Companies with a total market share of 13.5% in the represented market.

During the quarter, the Company received approval to market Tamsulosin Hydrochloride capsules 0.4 mg & Lisinopril 5/10/20 mg from Health Canada. Both the products have a combined market size of ~ USD 70 Mn.

EU (European Union)

EU recorded sales of USD 363 Mn, a robust growth of 24%. For the quarter sales were at USD 106 Mn, 37% higher than the corresponding previous period. The European operations of the Company witnessed a stronger financial performance led by the key markets of Western Europe i.e. Germany, UK & France, which for the year accounted for 47% to EU sales and grew by 28%. Romania recorded a good growth while the newer markets of Italy & Spain also progressed well.

Performance in the key European markets:

Romania recorded sales of USD 120 Mn for the full year, a growth of 21%. For the quarter, sales were at USD 32 Mn., up 23%. The Company captured the largest market share in the generics segment, attaining 12.3% in Q3, 2007. The integration of Terapia, acquired in 2006, was completed successfully and in H1, the combined entity Terapia -Ranbaxy received more than 20 new market authorizations. Terapia-Ranbaxy also obtained new manufacturing and import permissions as per EU norms and standards, consequent to the alignment of its quality systems with EU standards.

Germany: Sales for the year registered a robust increase of 69% at USD 49 Mn, while for the quarter sales were at USD 16 Mn, an increase of 170%. The Company had earlier restructured its sales and marketing operations in anticipation of the pricing and regulatory changes in the market place and was able to successfully mitigate this impact. The Company during the year won 11 products in the AOK tender, resulting in the robust performance both for the quarter and the full year.

During the quarter, the Company introduced Risperidone OD, a Day 1 launch, taking the total number of new product launches in the year to 6.

UK: The Company’s operations in UK reflected a turnaround in performance with sales for the year registering a strong growth of 36% at USD 47 Mn. Sales for the Quarter were USD 12 Mn, an increase of 22%. The performance was driven by new product launches including Day 1 launches and the growth in the respiratory branded business.

During the quarter, 3 new products were launched i.e. Risperidone, a Day 1 launch, Alendronate & Isotretinoin, taking the total number of new product launches in the year to 8. The branded business, led by inhaler products grew by 27% in the year reflecting the Company’s growing presence in the respiratory segment.

France: For the full year, sales in France were at USD 73 Mn, a growth of 5% over 2006, while for the quarter, sales were USD 27 Mn for the Quarter, a robust increase of 51% over the corresponding previous period. France witnessed a gradual improvement in performance on a trailing quarter basis with QoQ sales showing a steady rise. New product launches and increased switching of products to India helped the French business record a much- improved performance.

The quarter witnessed two day 1 launches i.e. Lanzoprazole and Risperidone, taking the total number of products launched in the year to 20 (with a total of six Day 1 launches).

Rest of Europe: Sales for the full year sales stood at USD 74 Mn, +20%, and for the quarter at USD 20 Mn, a growth of 6%. Portugal, Italy & Spain were the key contributors to growth during the year with combined sales of USD 22 Mn in 2007. Italy & Portugal recorded a growth in excess of 60% while Spain grew by 11%.

Asia & CIS

The Asia & CIS region recorded sales of USD 501 Mn for the year, an increase of 22% and for the quarter sales were at USD 138 Mn, 26% better. This was a result of the robust performance in the Company’s operations in India, Middle East, Malaysia, China and the CIS region.

India (excl. GCHC):  The India business continued to witness a strong growth momentum with sales for the year recording a growth of 22% at USD 301 Mn. In rupee terms, India region sales grew by 11% for the year. For the quarter, sales were at USD 76 Mn, 30% better than the corresponding previous period. The Company’s performance was driven by, a better product mix and an increasing share in the chronic therapy product basket.

 The branded product formulation sales during the year witnessed a growth of 13% (in rupee terms). These exclude the ARV & Blue R range of generic generic products.

·    Contribution of Chronic therapy portfolio to total sales stands at 24% (November, 2007 MAT) against 21% over corresponding period last year. Ranbaxy’s Chronic Portfolio has grown at a higher pace of 22% against 18% for the market.

·    Amongst “New Product Introductions” category, Ranbaxy has the highest numbers of brands featuring amongst the Top-30 leading launches in the industry over two years. These brands are: Volix (Voglibose), Synasma (Doxophylline), Volitra (Topical NSAID formulation) & Gembax (Gemifloxacin)

·    OPPI (Organization of Pharmaceutical Producers in India) –the largest industry association, selected Volix (an anti-diabetic formulation brand of Ranbaxy India) for its Marketing Excellence Award in the “New Pharmaceutical Products” category acknowledging effectiveness of its marketing strategy and performance in the market place.

·    The Penems portfolio (Cilanem, Faronem, Zivator) has captured 29 % share in the segment (November, 2007 MAT)

·    The Novel Drug Delivery System (NDDS) portfolios contribution to total Ranbaxy sales stood at 9% and the Company remained among the leading companies with 7% market share in the NDDS segment (November, 2007 MAT)

·     During the Quarter, company launched Caldrink (Calcium Pidolate+Vitamin D3) for the calcium supplementation therapy for the first time in India.

·     During the quarter, the Company also launched the Osane Nasal Spray, a novel once a day product used in the treatment of seasonal & perennial allergic rhinitis in adults and adolescents. The product will further strengthen the Company’s growing presence in the respiratory segment in the domestic market.

·     The Company also received approval to manufacture & market Coviro – LS kid and Coviro – LS kid DS, both double ARV and fixed dose combination, dispersible tablets, for children. The Company has also filed these products with the WHO Geneva for pre-qualification.

CIS (Russia and Ukraine Belt): Sales were at USD 90 Mn (+ 22%) for the full year and for the quarter sales stood at USD 31 Mn (+13%). Russia recorded sales of USD 52 Mn, +17% for the year. For the quarter, sales were at USD 19 Mn recording a growth of 7%. In Russia, both the ethical & OTC segments have registered a good performance led primarily by 2 key products i.e. Ketanov & Faringosept. For the full year sales in Ukraine were at USD 38 Mn, a strong growth of 28%. Sales for the quarter grew by 26% to USD 12 Mn. The Company continued to hold its market leadership position for key brands such as Loxof, Ketanov & Cifran.

Asia Pacific (excl. India): Recorded sales for the full year at USD 88 Mn, +24% and for the quarter at USD 26 Mn, an increase of 33% over the corresponding previous period. The robust performance in the region was led by China, Thailand & Malaysia contributing over 60% to the regions turnover and recording a strong growth of 49%. While the growth in China was led by the performance of key brands such as Simcor, Cifran & Cefaclor, the businesses in Thailand & Malaysia grew well due to the institutional sales.

Global Consumer Healthcare: Sales for the full year stood at USD 37 Mn, 32% better and for the quarter sales were at USD 11 Mn, a growth of 32% over the corresponding previous period. Revital, the Company’s key brand in the segment continued to perform well having increased its market share from 77% to 84%. Revital is currently ranked at No 20 per MAT Nov 07 versus No 35 in the same period last year. The OTC business has recorded a healthy growth of 27% over last year (ORG – SSA Mat Nov ‘07). The Volini brand, which was shifted in the early part of the year to the GCHC business is beginning to show encouraging results post the initiation of the television & media promotion campaign started in Q3 this year.

Rest of the World (RoW)

For the year sales in Africa were at USD 126 Mn, an increase of 42% while for the quarter, sales were at USD 37 Mn, a growth of 22%. All key countries in the African continent registered buoyant growth led by South Africa, Central & South East Africa and the French West region. South Africa recorded sales of USD 53 Mn for the year, a growth of 18%, while for the quarter, sales stood at USD 16 Mn, +22%.

Sales in Brazil for the year were at USD 39 Mn, a growth of 44% and for the quarter at USD 11 Mn, a robust growth of 40%. The Company is currently ranked 5th in the generic market, having improved its position from the 6th rank previously held. The Company’s market share in unit terms has increased from 2.7% for the period Q4’ Nov 06 to 4.1% in Q4’ 07 (Source: IMS).

Rest of Latin America (excl. Brazil) registered sales for the year at USD 25 Mn, +18% while sales in the quarter stood at USD 9 Mn, an increase of 19%. The Company’s operations in Ecuador, Peru & the CACI region registered strong growth contributing to the overall growth in the region.

Mergers & Acquisitions

The Company continued to increase its focus on gaining access to the select fast growing and complex therapeutic segments by making strategic investments to fill in the gaps in its product portfolio. With access to these niche specialty product baskets through alliance and acquisitions, the Company intends to leverage its extensive front-end marketing presence and regulatory expertise with the technical capabilities that these Companies will bring. During the year, the Company concluded 3 key transactions on this front.

·         Ranbaxy acquired a 14.9% stake in the equity capital of Krebs Biochemical Industries Limited for a total consideration of Rs 89 million. This strategic stake provides the Company with access to low cost manufacturing of fermentation-based products.

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·         The Company acquired a 14.9% stake in the equity capital of Jupiter Biosciences Limited, a Company specializing in the development and manufacture of peptide products.

·         The Company also acquired a further equity stake in Zenotech Laboratories Limited taking it’s holding in the Company to 45%, from the 7%, previously held. Zenotech has a robust product portfolio in the bio-similar and oncology segments covering approximately 1/3rd of the current biopharmaceutical market.

·         The scheme of NDDR de-merger is under finalization and shall be announced in early February on receipt of all approvals. The same shall be effective Jan 1, 2008.

Research & Development

The Company filed 28 ANDA’s and received approval for 18 ANDA’s in the USA in 2007. In the EU, the Company made a total of 49 National filings in 12 Reference Member States (RMS) and received approval for 48 National Filings in 8 RMS.

During the year the Company made progress in the following molecules currently in its NCE pipeline:

RBx 11160, the Company’s anti-malaria molecule successfully completed Phase I trials in combination with piperaquine.  Phase II trials for the same have been initiated in Thailand and India.

The Company also out-licensed its novel statin molecule to PPD Inc. who would be responsible for its clinical development. The Company also received a milestone payment from PPD Inc. for the completion of the Phase I clinical studies.

With respect to the expanded agreement with GlaxoSmithKline, a clinical candidate was selected in one of the programs in the GSK alliance. This resulted in a milestone payment to the Company. Two more programs were further added to the GSK alliance.

The Company also completed exploratory toxicity studies and initiated IND enabling studies on three internal molecules. 

Oncology research was added as a new therapeutic category in the NCE area. 

Sourced From: Ranbaxy Laboratories Ltd