Ranbaxy's Q3 PAT Increases 48%
GLOBAL SALES AT USD 406 MN, UP BY 15%
IN PRINCIPLE BOARD APPROVAL FOR R&D DEMERGER FOR DRUG DISCOVERY RESEARCH
Gurgaon, Haryana, India - October 18, 2007
The Board of Directors of Ranbaxy Laboratories Limited (RLL) at their meeting held today, took on record the unaudited standalone results for the quarter ended September 30, 2007.
The Board of Directors also approved an in-principle de-merger of the Drug Discovery Research set-up in to a separate Company and declared an interim dividend of Rs 2.50 per share.
Key Financial & Operational Highlights for the Quarter (Ranbaxy Laboratories Limited & Subsidiaries)
- Consolidated Revenues at USD 406 Mn, records growth of 15%.
Net Profit at USD 50 Mn, grew by 65%. In rupee terms Net Profit stood at Rs. 2,074 Mn, up 48%. Excluding foreign exchange gains / losses on translation, Net Profit was at Rs 1,619 Mn, +13% over the corresponding previous quarter.
- Earnings before Interest, Depreciation, Tax & Amortization (EBIDTA) at USD 69 Mn (Rs 2,831 Mn), reflects margin to sales of 17.1%. Excluding foreign exchange gains/losses on translation, EBIDTA margins were at 18% to sales.
- Sales in USA at USD 102 Mn, a growth of 7%. Base business growth in USA increased by 35% (without sales of First-to-File products).
- Companyâ€™s flagship brand in the US, Sotret (Isotretinoin), doubles market share to 48%. Branded business gains further momentum with the addition of the dermatology portfolio acquired from Bristol Myers Squibb (BMS).
- Emerging Markets continue to witness good growth; comprise 54% to global sales and record a 17% growth in the quarter.
Company to increase stake in Zenotech Laboratories from 7% to 45%. The alliance to significantly expand its future product pipeline to include products in the fast emerging and high growth segments of biogenerics, oncology and specialty injectables.
- Company reaches an agreement with GlaxoSmithKline for Valtrex (Valacyclovir Hydrochloride Tablets). Under the agreement, Ranbaxy to launch the product in late 2009 with a secure 180 days marketing exclusivity. The total annual market sales of the product stood at USD 1.3 Bn ( Source :IMS)
- The Company had a favorable decision in its Atorvastatin case in Canada on one of the two patents; the Federal Court of Canada ruled in its favor on patent CA 2,220,455.
- R&D De-merger for Drug Discovery Research (DDR)
Ranbaxy received an in-principle approval from the Board to de-merge its Drug Discovery Research operation. The Company believes that this is a significant step in creating an independent pathway for DDR with dedicated resources and enhanced focus for long-term value building. Ranbaxy has state of the art Research infrastructure and a highly skilled scientific talent pool. These strengths can be more effectively leveraged through an independent vehicle that better aligns assets with priorities to accelerate the companyâ€™s drug discovery programmes. The resulting operational freedom and flexibility will also help to open up new growth opportunities while providing a platform for increased collaboration. The specific framework and other details of the de-merger will be finalized by the end of the year.
Consolidated Financial Performance (Ranbaxy Laboratories Limited and Subsidiaries)
Quarter ended September 30, 2007 (Q3)
For Q3, Ranbaxy achieved Sales of Rs. 16,520 Mn [USD 406 Mn] (2006: Rs. 16,404 Mn, USD 354 Mn). Profit before finance cost, depreciation, tax and amortization was at Rs. 2,831 Mn [USD 69 Mn] (Rs. 2,471 Mn, USD 53 Mn), reflecting an EBITDA margin of 17.1% to sales. Excluding the foreign exchange gains/losses on translation, EBITDA margins stood at 18% to sales. Profit before tax stood at Rs. 2,590 Mn [USD 62 Mn] (Rs. 1,782 Mn, USD 38 Mn), an increase of 45%. Profit after tax excluding the foreign exchange gains/losses on translation was at Rs 1,619 Mn [USD 40 Mn] (Rs 1,433 Mn, USD 31 Mn), an increase of 13%. Profit after tax was at Rs. 2,074 Mn [USD 50 Mn] (Rs. 1,404 Mn, USD 30 Mn), recording an increase of 48%.
Earnings per share on a fully diluted basis were Rs. 4.35 (2006: Rs. 3.37).
Nine months ended September 30, 2007 (YTD Sept.)
For YTD Sep., the Company recorded Sales of Rs. 48,402 Mn [USD 1,156 Mn] (2006: Rs. 43,621 Mn, USD 959 Mn), registering a growth of 11%. Profit before finance cost, depreciation, tax and amortization was at Rs. 7,004 Mn [USD 167 Mn] (Rs. 6,542 Mn, USD 144 Mn), reflecting an EBITDA margin of 14.5% to sales. Excluding the foreign exchange gains/losses on translation, EBITDA margins were at 16.1% to sales. Profit before tax stood at Rs. 7,632 Mn [USD 182 Mn] (Rs. 4,194 Mn, USD 92 Mn), an increase of 82%. Profit after tax excluding the foreign exchange gains/losses on translation was at Rs 4,269 Mn [USD 102 Mn] (Rs 3,665 Mn, USD 81 Mn), an increase of 16%. Profit after tax was at Rs. 6,023 Mn [USD 144 Mn] (Rs. 3,345 Mn, USD 74 Mn), recording a rise of 80%.
Earnings per share on a fully diluted basis were Rs. 11.10 (2006: Rs. 8.89).
Commenting on the business results, Mr. Malvinder Mohan Singh, CEO and MD, Ranbaxy, said, " Our business performance remains strong and we expect this trend to continue for the remaining part of the year. Ranbaxyâ€™s consolidation of its strategic stake in Zenotech and its expansion in the emerging high value segments of Biosimilars, Specialty Injectables and Oncology, is opportune and well timed, and will be a key growth driver for the company in the future. The proposed de-merger of our Drug Discovery Research arm will provide greater flexibility and impetus to our Drug Discovery Research Programmes while unlocking significant value for the Company and its shareholders.
For Q3, global sales registered an increase of 15%, touching USD 406 Mn. During the period, the emerging markets delivered higher sales growth in comparison to the developed markets. The contribution of emerging markets was 54% to total sales with a growth of 17% while the developed markets recorded a growth of 12% and contributed 39% to total sales. India, Ukraine belt, South Africa and Brazil were the primary drivers of performance in the emerging markets while Europe & USA added to the growth in the developed markets.
For YTD, global sales were at USD 1156 Mn, recording a growth of 21%. The Companyâ€™s business in the fast growing and profitable emerging markets continued to witness an uptrend, contributing 54% to total sales with a strong growth of 35%. The developed markets performed consistently with a growth of 12% and accounted for 39% to total sales.
The Companyâ€™s performance on a YTD Sep. basis was a result of an all-round growth in its key regions comprising the spectrum of developed and emerging markets; Europe recorded 19% growth with sales of USD 257 Mn and India & CIS regions achieved a sales growth of 20% (USD 251 Mn) and 27% (USD 59 Mn) respectively. Africa, Latin America and the Asia Pacific region also maintained their buoyant growth.
Sales in North America were at USD 109 Mn, recording an increase of 11% for the quarter. For YTD Sep, North America recorded sales of USD 302 Mn, a growth of 9%.
Ranbaxyâ€™s USA operations recorded sales of USD 102 Mn, a growth of 7% for the quarter. For YTD Sep., sales stood at USD 282 Mn, a growth of 4%. The Companyâ€™s base business portfolio (excluding sales from First-to-File products) continued its robust momentum with strong sales growth of 35% for the quarter. On an YTD Sep. basis, the base business registered a sales growth of 23%.
The Companyâ€™s leading brand in the dermatology segment, Sotret, consolidated its market leadership position by almost doubling its market share from 24% in Q3 2006 to 48% for the month of August. The Companyâ€™s branded business in the USA gained further momentum with the addition of the recently acquired dermatology products portfolio from BMS. Ranbaxy is confident of further strengthening its dermatology franchise with the addition of these products in its basket..
During the quarter, the Company received 10 ANDA approvals, which included 9 final approvals, and 1 tentative approval. The Company received final approvals for various strengths & dosage forms for Hydrocodone Bitartrate and Acetaminophen Tablets, Metformin Tablets, Hydrochlorthiazide Tablets, Amlodopine Besylate Tablets, Carvedilol Tablets and Clarithromycin for Oral Suspension.
The Company also received a tentative approval for Galantamine Hydrobromide Tablets in which it has a 180 days shared marketing exclusivity. Galantamine is indicated for the treatment of mild to moderate dementia of the Alzheimerâ€™s type. Total annual market sales for the product were USD 130 Mn. (IMS â€“ MAT: June 2007)
Ranbaxy announced the commercialization of its first Authorized Generic (AG) product, Isoptin SR (Verapamil SR), following an acquisition of the product registration from FSC Laboratories, Inc. of Charlotte, North Carolina, USA. The generic market for Verapamil SR is valued at USD122 million (IMS - MAT: December 2006).
Ranbaxy entered into a lawsuit settlement with GlaxoSmithKline (GSK) on Valtrex (Valacyclovir Hydrochloride tablets). Under the agreement, Ranbaxy will enter the US market in late 2009 as the first generic, with a 180 days marketing exclusivity. The total annual market sales of Valtrex were around USD 1. 3 Bn ( Source : IMS).
During the quarter, sales in Canada recorded a growth in excess of 100% at USD 7 Mn, while sales on an YTD Sep basis recorded similar growth registering a turnover of USD 20 Mn. The Company is ranked 9th in the marketplace with 1.8% market share (QTD Aug) of the total generics market and 13% market share in the represented molecules.
Ranbaxyâ€™s sales in Europe stood at USD 78 Mn, a growth of 8% over the corresponding quarter of the previous year. For YTD Sep., sales were at USD 257 Mn, recording a growth of 19%. The Companyâ€™s growth in Europe was a result of healthy performances in itâ€™s key markets of UK, Germany, Romania & Poland well supplemented with an encouraging contribution from the recently entered markets of Spain & Italy.
Key Country Highlights in EU (European Union)
During the quarter, sales in UK were at USD 11 Mn, recording an increase of 16%. On a YTD Sep basis, sales were at USD 36 Mn, a growth of 41%. The performance in UK was driven by a mix of growth in the existing product basket and new product launches that have been performing well in the marketplace. Gabapentin launched in Q1 of 2007 continued its strong performance with the 600 mg dosage strength garnering a 40% market share. Sales of the respiratory products comprising the branded business, showed an improved performance, recording a buoyant growth in the quarter.
Sales in Germany increased by 53% to USD 11 Mn during the quarter while on a YTD Sep. basis, sales stood at USD 33 Mn, recording a 43% rise. The performance in Germany was driven by the continuing strong sales of the current listed products with AOK, Germanyâ€™s largest health insurance company.
The Companyâ€™s business in Romania achieved sales of USD 23 Mn for the quarter, at similar levels to the corresponding previous period. On YTD Sep. basis sales stood at USD 89 Mn, a growth of 20%. The market share of the Company moved up to 5.8% for the month of August as compared to 5.4% in Q1 2007.
Rest of Europe, comprising of Spain, Italy, Poland and countries in Central & Eastern Europe, registered sales of USD 16 Mn during the quarter, at similar levels of the corresponding previous period. On a YTD Sep. basis, sales stood at USD 54 Mn, an increase of 26%. The growth in Rest of Europe was led by robust performances in all the markets, including Poland, Spain, Italy and Portugal.
Asia & CIS
During the quarter, Asia and the CIS region recording a combined sales of USD 139 Mn, a growth of 12%. For YTD Sep., sales were at USD 388 Mn, +22%. During this period, most markets witnessed a strong sales growth with India & CIS being the key contributors. While the India business recorded sales of USD 251 Mn, with an increase of 20%, sales in the CIS countries stood at USD 59 Mn, +27%. Countries in the Middle East, China & Thailand also registered a sales growth in excess of 30% individually.
The sales for the quarter were at USD 81 Mn, 15% better than the corresponding previous period. The growth was led by the chronic business which recorded an increase of over 20% while the acute therapy segment grew at approximately 9%.
On an YTD Sep basis, the India region recorded revenues of USD 225 Mn, an increase of 19%.
During August, 2007 MAT period, the Company has garnered a market share of 4.92% (4.83% on Moving Quarter basis). For the month of July and August 2007, Ranbaxy was ranked Number 1 in the domestic market.
Contribution of Chronic therapy portfolio to total sales stood at 25% (Moving Quarter August 2007) as against 21% over the corresponding period last year. This is in line with the strategy to realign portfolio & resource deployment in the Chronic therapy segments.
The Company has 18 brands in Top 300 brands of the Industry, with 9 brands featuring amongst the Top-100 league. Amongst â€œNew Products Introductionâ€ category, Ranbaxy has the highest numbers of brands amongst Top 30 brands over last one year.
The Penems portfolio (Cilanem, Faronem, Zivator) continued its dominant position garnering a 31 % market share in the segment. (Moving Quarter August 2007)
The Novel Drug Delivery System (NDDS) portfolio contribution to Ranbaxyâ€™s sales was at 9% (Moving Quarter August 2007) and the Company remained among the top rung companies with 7% market share in the NDDS segment. (Moving Quarter August 2007)
During the Quarter, three novel formulations - Roliflo (Tamsulosin+Tolterodine), Tevran (Tigecycline) & Zivator (Ertapenem) were launched in India. Roliflo OD is unique combination drug for the management of 'Bladder Outlet Obstruction with concomitant overactive bladder', a chronic urological disorder. Tevran, is the first in class Glycylcycline antibiotic segment indicated for the treatment of complicated drug-resistant bacterial skin infections & complicated intra-abdominal infections. Zivator is a broad-spectrum, injectable carbapenem antibiotic with activity against gram-positive, gram-negative, and anaerobic bacteria.
In September this year, Ranbaxy signed an exclusive in-licensing agreement with Sirtex Medical Pvt Ltd (Sirtex), Australia, to promote and market Sirtexâ€™s product, SIR-SpheresÂ® in India and other select countries. This unique, high technology product, approved by the US Food and Drug Authority, is used for the treatment of patients with inoperable tumors from primary colorectal cancer that have spread to the liver (Unresectable Metastatic Liver Tumors from Primary Colorectal Cancer). This would further strengthen the Companyâ€™s position in the oncology segment.
Ranbaxyâ€™s Global Consumer Healthcare business recorded sales of USD 10 Mn in the quarter, a growth of 21% over the corresponding previous year. On an YTD Sep. basis sales were at USD 26 Mn, + 32%. Revital further strengthened its leadership position in its segment with a 79% market share; an increase of 3% versus the corresponding previous period (ORG â€“ SSA MAT Aug 07).
Rest of the World (RoW)
Africa, recorded sales of USD 34 Mn, up 23%, in the quarter. For YTD Sep., sales were at USD 89 Mn, a growth of 26%. The major countries in Africa contributing to growth during the quarter were South Africa with a growth of 49% (like to like basis) & Nigeria, which registered a growth of 49%, reaching sales of USD 17 Mn and USD 6 Mn respectively. For YTD Sep., sales in South Africa grew by 23% while sales in Nigeria increased by 29%.
The World Health Organization, (WHO), Geneva, included three more Anti Retroviral (ARV) products of the Company in its pre-qualification list taking the total to 15 ARVs. With these inclusions, Ranbaxy now has a total of 15 ARVs on the WHO pre-qualification list consisting of single dose and fixed dose combination products.
In Latin America, sales for the quarter stood at USD 18 Mn, recording a robust growth of 34% over the corresponding previous period. On an YTD Sep. basis, sales were at USD 44 Mn, again a 34% growth over the corresponding previous period. Brazil continued to be the largest market for the Company in the Latin America region with sales of USD 12 Mn for the quarter (+63%) and USD 28 Mn on an YTD Sep basis (+46%). The Company is currently ranked 5th in the generics market with a market share of around 4% (IMS Q3 07).
Strengthening its position in the Emerging Biopharmaceuticals and Specialty Injectables segment
In October 2007, the Company made an important strategic investment by proposing to increase its equity stake in Zenotech Laboratories from 7% to 45% The alliance with Zenotech is expected to significantly enhance the Companyâ€™s presence in two high potential segments in the pharmaceutical market over the next decade; these being biopharmaceuticals and specialty injectables including oncology.
The strategic rationale for this move was for Ranbaxy to further leverage & capitalize on its extensive front-end marketing model & regulatory expertise through a new pipeline of high potential products in these fast-expanding therapies. The Company believes that Zenotech today has one of the most impressive pipelines in the Biologics segment globally. These areas require specialized skills, technologies and infrastructure, leading to high entry barriers and limited competition, resulting in higher profitability & sustainability in earnings opportunity.
The Biopharmaceutical market is today valued at USD 65 Bn and is expected to grow strongly to USD 100 Bn in the next 3- 5 years. Oncology therapy presently valued at USD 35 Bn expected to grow 20% consistently over next 3-5 years to become the single largest therapy globally(Source: IMS). [Zenotechâ€™s pipeline of Biologics products addresses a third of the Biologics market approximating to USD 20 Bn].
Zenotech is a fully integrated player with strong back end competencies & capabilities of R&D and Manufacturing in complex and highly specialized fields. Zenotech has received three Indian approvals for Oncology Biopharmaceuticals i.e. GCSF (Granulocyte Colony Stimulating Factor), GM-CSF (Granulocyte Macrophage Colony Stimulating Factor) and IL-2 (Interleukin-2). For the latter two, Zenotech is the first to receive approvals in India, and has a pipeline of further seven Biopharmaceutical products in different stages, all developed in-house.
Research & Development
During the Quarter, the Company filed 4 ANDAs with the US FDA and received approval for 10 ANDAâ€™s (9 final and 1 tentative) taking the cumulative filings, as on date, to 222 with 139 approvals. In the European Union (EU), 8 national filings in 5 Reference Member States (RMS) was made and the Company received 13 approvals in 4 RMS.
Consequent to the completion of the Phase II studies of its anti-malaria molecule, Arterolane, Phase I studies with the combination product (Arterolane + Piperaquine) have been completed and results show the drug to be safe and well tolerated in healthy volunteers. Phase II trials of the combination drug are in the process of being initiated in the current quarter.
The two programs in the respective areas of Chronic Obstructive Pulmonary Disease (COPD) and anti-infective, identified under the GSK alliance, are progressing as per plan and the team has identified a development candidate for one of the programs.
Ranbaxy Laboratories Limited, headquartered in India, is an integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. Ranbaxy's continued focus on R&D has resulted in several approvals in developed markets and significant progress in New Drug Discovery Research. The Company's foray into Novel Drug Delivery Systems has led to proprietary "platform technologies", resulting in a number of products under development. The Company is serving its customers in over 125 countries and has an expanding international portfolio of affiliates, joint ventures and alliances, ground operations in 49 countries and manufacturing operations in 11 countries.
Statements contained in this press release refer to Ranbaxy's estimated or anticipated future results or other non-historical facts statements reflecting Ranbaxy's current perspective of existing trends and information as of the date of this release. These forward-looking statements contained in this press release speak only as of the date the statement was made. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. By their nature, these expectations and projections are only estimates and could be materially different from actual results in the future. Ranbaxy undertakes no obligation (nor does it intend) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required under applicable law.