Ranbaxy said consolidated sales fell 28.8 per cent to Rs 26.71 billion in the fiscal fourth quarter ended December.
MUMBAI: Ranbaxy Laboratories Ltd , India's top drug maker by sales, said its base business would grow a modest 10 percent in 2013 after reporting a surprise quarterly loss on product recall charges, sending its shares down more than 4 percent.
Controlled by Japan's Daiichi Sankyo Co, Ranbaxy reported a quarterly net loss of 4.92 billion rupees ($91.30 million) after setting aside 1.86 billion rupees towards recall costs. Analysts on average had estimated consolidated net profit at 1.44 billion rupees on net sales of 26.96 billion rupees, according to Thomson Reuters.
The drug maker in November voluntarily recalled its cholesterol lowering generic of Lipitor from the U.S. market after it discovered contamination with tiny glass particles in certain lots of 10mg, 20mg and 40mg doses of the drug.
"This is really bad. This raises serious questions about transparency," said Daljeet Kohli, head of research at brokerage IndiaNivesh. "The company has been saying that this recall was voluntary and now it has made a huge provision for costs, which is not a good thing for any company to do."
After the product recall, Ranbaxy's market share of generic Lipitor fell to less than 3 percent, according to industry estimates. The drug maker has now resumed supplying the United States.
Ranbaxy launched the first generic version of Pfizer's Lipitor in 2011 and during its first six months on the market the company generated sales of nearly $600 million, according to analysts’ estimates.
The company said it expects to achieve sales of over 120 billion rupees in the current fiscal year ending December, compared to 124.6 billion rupees reported in 2012.
Q4 NUMBERS DISAPPOINT
Ranbaxy said consolidated sales fell 28.8 percent to 26.71 billion rupees in the fiscal fourth quarter ended December. Sales in its key North America market fell to 8.51 billion rupees ($157.91 million) in October-December compared to $407 million in the year earlier when the company gained from exclusive rights to sell generic Lipitor in the United States.
Global demand for cheaper generic medicines from companies like Ranbaxy and local rivals Dr. Reddy's Laboratories Ltd, Cipla Ltd and Sun Pharmaceutical Industries Ltd is booming as developed nations battle rising healthcare costs.
The drug makers however, face intense competition as well as an increase in lawsuits from rival drug makers and a stricter U.S. regulatory environment.
Valued at $3.2 billion, shares in Ranbaxy fell 3.95 percent at 416.70 rupees on Tuesday when the Mumbai market was down 1.64 percent. The shares have fallen 17.6 percent this year compared to a 3.2 percent drop in the benchmark healthcare index.