MUMBAI - Daiichi-Sankyo controlled Ranbaxy Laboratories Ltd. took analysts in India by surprise with a forecast of a very conservative growth target that did not factor in any upside from a possible launch of a generic version of Lipitor (atorvastatin) in the U.S.

As part of its disclosures to stock exchanges Feb. 22, Ranbaxy said, "During 2011, the company expects to achieve base case sales of approximately $1.87 billion."

Analysts expected better from Ranbaxy at a time when emerging markets are showing an upswing for the company. Having found no reason for Ranbaxy's guidance, one of them said it was "unbelievable" given that in most emerging markets major multinational companies have performed well, including the Indian market.

Alok Dalal, another analyst with MF Global, noted that Ranbaxy may have excluded the gains that came from launches during the exclusivity period from products like donepezil (Eisai's Aricept). Compared with its projection for 2011, Ranbaxy's growth may actually be better, he said, noting that "over the base business of 2010, that will still mean a growth of 15 percent in 2011."

Explaining the lower revenue guidance, he said Ranbaxy's European business has not been encouraging, citing margin pressure due to price cuts in countries like France. "U.S. and India will therefore have to show a much bigger sales push for Ranbaxy," the analyst said, adding that Europe may see a much steeper fall for the company in coming years.

Silent on Lipitor And U.S. FDA Issues

More importantly, Ranbaxy stayed away from making any pointed references to its biggest-ever revenue opportunity from the much-awaited patent expiry of Pfizer Inc.'s Lipitor in the U.S. in November.

Speaking to analysts during a Feb. 22 earnings call, Ranbaxy execs said it would be best to discuss upsides from Lipitor closer to the date of the patent expiry in October when market dynamics for Lipitor will be clearer. Ranbaxy dodged analyst questions related to the granular details regarding a U.S. FDA investigation that could significantly impact the company's launch plans.

A senior executive from a rival Indian company said it is "unusual" that Ranbaxy declined to provide more color about the atorvastatin launch, which is jeopardized by a prolonged FDA investigation of two Ranbaxy manufacturing sites in India.

Pfizer and Ranbaxy have a comprehensive deal in place that enables the generic company to launch copies of the best-known pharmaceutical brand in the U.S. market on Nov. 30, 2011 and retain market exclusivity for 180 days ('Ranbaxy Lipitor Settlement With Pfizer Could Double Indian Firm Sales,' PharmAsia News, July 31, 2008). Separately, Watson Pharmaceuticals Ltd. holds exclusive rights to sell an authorized generic under Pfizer's NDA for five years, and will launch in November.

Lipitor presents the biggest generic opportunity ever, with Pfizer reporting $5.33 billion in U.S. sales last year, although it is a steep decline from peak sales due to a chipping away of market share by generic rivals like simvastatin. It is unlikely that many ANDA filers will rush in after the 180-day period, either because they remain immersed in patent litigation with Pfizer or are blocked from obtaining approval due to manufacturing and regulatory problems faced by Ranbaxy (Also see "The Last Days Of Lipitor: Morass Of Regulatory, Legal Issues Could Mean Few Early Generics" - Pink Sheet, 14 February, 2011.)

Great Past - What Next?

Ranbaxy management, however, remained upbeat on the "positive results" from the last year. "We have had a strong year attributable in large measure to the robust revenue growth in our key geographies and the realizations from our first-to-file opportunities in the U.S. On the cost side, we have gained from greater efficiencies in manufacturing," said Ranbaxy Managing Director Arun Sawhney.

The largest Indian company - majority owned by Daiichi Sankyo since 2008 - declared its 2010 earnings of $1.86 billion, compared to $1.51 billion in 2009, marking a growth of 23%. Ranbaxy's post-tax profit during the 12 months of 2010 improved to $327 million against $61 million in the previous year. Ranbaxy's U.S. sales jumped 80% over the previous year at $600 million.

Ranbaxy faired lower than its Indian peers in the Indian market with a growth of 8% but most of its emerging markets like the Commonwealth of Independent States countries grew at 18% while revenues rose by 18% in Africa at $154 million.

Ranbaxy highlighted that over 50 national level regulatory agency inspections were conducted successfully at Ranbaxy's various global sites. That included regulators from U.S. FDA, the European Medicines Agency, South Africa, Brazil, Australia, as well as the World Health Organization, among others.

Addressing analysts over the call, Ranbaxy's Sawhney said the company is geared up to retire its debts of around $440 million by March 2011. The revenue guidance of $3 billion by 2012, however, may be scaled down and reviewed by May this year, the executive hinted.

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

Ranbaxy Forecasts Conservative Growth, Remains Silent On Atorvastatin Launch, U.S. FDA Action

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