MUMBAI - India's largest drug maker Ranbaxy suffered heavy losses during its third quarter primarily due to U.S. FDA action in September that clamped an import ban on over 30 of its products.

U.S. FDA charged Ranbaxy of significant deviations from good manufacturing practices at two of its sites located in India. Almost 24 percent of Ranbaxy's total sales come from the U.S. market (Also see "Ranbaxy Woes Continue With 30-plus Product Import Alert" - Scrip, 16 September, 2008.).

Ranbaxy wrote off $59 million as loss due to the import ban by FDA. To add to its woes, Ranbaxy showed a foreign exchange loss of $73 million due to the substantial fluctuation in the dollar-rupee currency exchange rates. Ranbaxy management cautioned that the foreign exchange fluctuations will continue to impact the current quarter performace of the company.

Ranbaxy's consolidated net sales grew by 14 percent to $431 million, but its net loss reached $96 million for the third quarter announced Oct. 31.

Ranbaxy CEO Malvinder Mohan Singh told press after the board of directors meeting that the company is working on alternatives to tide over the current situation in the U.S. "We are approaching a few U.S. FDA approved third parties for manufacturing, looking at expanding our capacities in the U.S. and also acquiring new facilities for the manufacture of products that are restricted by U.S. FDA," he said.

"The company is cooperating with the U.S.FDA and remains positive that all the outstanding issues will be resolved," Singh said.

Barring the setback in sales in the U.S., Ranbaxy's businesses in the emerging markets grew by 20 percent and developed markets showed a growth of 9 percent. Canada had a jump of 139 percent in sales, while sales in Romania grew by 34 percent. In 2006, Ranbaxy acquired Terapia in Romania to figure among the top five generic companies operating in that country.

With just $34 million in sales, Ranbaxy's revenues from European countries like UK, France and Germany showed a downward trend due to increasing competition and pricing pressures.

Ranbaxy reiterated that it is close to completing the landmark deal with Japan's Daiichi Sankyo. Daiichi Sankyo already acquired 52.5 percent of the equity share capital of Ranbaxy through a mix of an open offer, an allotment of shares on preferential basis and an acquisition of shares from the existing promoters (Also see "Ranbaxy Officially Becomes A Daiichi Subsidiary As Management Turns To Business Synergies" - Scrip, 20 October, 2008.).

- Vikas Dandekar (v.dandekar@elsevier.com)

U.S. FDA Action Drives Ranbaxy Into Red; Company May Buyout Manufacturing Sites To Recover Lost Ground

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