Malvinder Singh, MD and CEO, Ranbaxy Laboratories, said the pharma major has incurred a forex loss of Rs 80 crore. Nexium revenues would kick in from H2 CY08, he said. “We will be able to launch a generic version of Nexium in 2014.”

Excerpts from CNBC-TV18's exclusive interview with Malvinder Singh:

Q: There have been two other incomes that have been shown - land sale which accounts for about Rs 89 crore and there is forex gain of about Rs 76 crore. Has this gone into the bottomline of this particular quarter; the Q1?

A: There is actually a forex loss in translation because the rupee has weakened from what it was at the end of December because we have liabilities in terms of debt. The last year we had taken gains on the rupee movement so this time there is a loss of around Rs 80 crore on that which is netted off with some other income which is below the EBITDA line. So both these items actually net off. But what’s important is that our topline growth is at 15%, USD 409 million - we have had a significant margin expansion to 17% which is a 3.6% to sales increase in margin, which has grown by 47% and our overall PAT has growth of 19% which is to USD 39 million or Rs 153 crore; if one takes out some of the translation losses and demerger of the NDDR activity. So that’s the core performance of where we are in the company for the quarter.   

Q: The losses that you mentioned on account of the forex losses. Is this also because of the derivative losses?

A: No; this is linked to the rupee movement; from where it was at the end of December to where it is today and because we have got liabilities which are in dollars. So as the rupee moves upward in terms of weakening there is that delta which gets reflected in this.

Q: A bit of clarity on land sale also – it’s about Rs 89 crore that you factored in. which land has been sold off?

A: This is some land and building that we had; we wanted to unlock a value out of that and use it for the growth of our business.   

Q: To the big deal that you struck Nexium. Can we get some ballpark figure on what exactly in ’08 this revenue gain will kick-in for Ranbaxy?

A: We believe its going to start sometime in the second half of this year because 40mg omeprazole where we have an authorised generic. Our launch is contingent to a generic getting launched, for which today there is no generic so at that point in time there will be three players in the market. So it’s a function of whether it will happen sometime in Q3 or Q4. But we hope it will happen this year and then for the other authorised generic is going to happen at the beginning of the next year. Then next year onwards we have got revenues that will come to us in terms of Active pharmaceutical ingredients (API) supply followed by dosage form supply in 2010 and this will carryon till 2014 and then we have 180 days as the only generic for Nexium which will come on May 2014. So these patents actually go on till 2019 but because of the settlement we will be able to launch in 2014.

Q: When exactly do you think the Felodipine gains will kick in for Ranbaxy?

A: In the beginning of 2009 and if you look at the entire basket in terms of the alliance and opportunity that we would have, we would get revenues anywhere between close to USD 1.25-1.5 billion from all of these, over the next many years.

Q: You have briefly spoken about a new research deal on the lines of what you have struck about a couple of years ago with GSK - this will be exactly similar and they will be giving out the original compounds which you will be taking up into the lab stage, will that be exactly similar to that, and what kind of revenue gains can we expect from that?

A: I think we would share the financial details of that once we have signed the deal. But this is something that we have been working and evaluating with many companies. We are close to signing a deal and this will further strengthen the new NDDR company as it gets demerged.

Q: So this will be factored into the new company, is it?

A: Yes, it will be.

Q: If I’m right, you have already started the search for a new CEO for that particular company, any names that you can share with us right now?

A: We have been a very strong team internally in the company and the same team will continue to run this business. We have a strong leadership team and there is absolutely no change in the team as we move forward, so I’m not looking for anybody.

Q: Coming to the Orchid deal, over the last 15-20 days there has been a lot of buzz about this particular alignment that Ranbaxy is doing with Orchid. Can you be a little more specific in terms of the products that you’ll be sharing and which markets will you be looking at attacking with Orchid’s products pipeline?

A: Firstly this is to me a great opportunity for Ranbaxy and Orchid to work together - this is a strategic global alliance between both the companies. It does cover multiple therapeutic areas and also many countries across the world, and this will enable both the companies to leverage each other strength far more effectively, then we would be able to do individually. And for us at Ranbaxy we have always believed in coexistence; we have always believed in partnership. We have created strategic partnerships with other companies in India, internationally and I’m personally of the view that the kind of changes that are happening in the global pharmaceutical industry, you will see a lot more of these partnerships in India and internationally. And therefore this is very much on those lines to enable companies to leverage each others capabilities and also to allow them to move up to the next level through partnership.

Q: What exactly will be the contours of the deal from the press release - we get to see very little; can there be some more visibility on the products that you will be sharing and what kind of a revenue sharing agreement that you will be having, which markets you will be looking at, will those questions be answered now?

A: We will be looking at products across all therapeutic areas that they are present in. We will be looking at markets around the globe where Ranbaxy has a presence.

Q: Will you be looking at hiking your stake in Orchid Chemicals further from 14.9 odd that you have right now?

A: The stake where we have today is 14.7% and I don’t wish to make any comments beyond that at this point in time.

Q: What about markets even the Indian markets, you have hinted a couple of quarters ago that you want to take your market share from the current 5-6% to up to 9%. There is a hope and a scope for consolidation in that particular market also. Will you be looking at an acquisition strategy within the Indian market also?

A: We will continue to valuate opportunities or acquisitions and alliances in India and you will see more of that happening over the next two-three years.

Q: There is also some kind of speculation happening on Aricept. There is some kind of a settlement possibility - many analysts share that with us. Possibly you will be able to make some comments on that particular drug?

A: We have a first to file; we are not sued and we have a tentative approval.