Revenues up by 71% yoy in rupee term; grew by 55% in dollar terms
Ranbaxy started its year with big bang. The company posted revenues growth of 71% yoy in rupee term whereas it grew by 55% in dollar terms. Again, like last quarter the growth was mainly led by its much awaited launch of generic Lipitor. There was an arrangement between Ranbaxy and Teva for the generic Lipitor launch. We believe the payment to Teva has limited the EBITDA expansion. Management indicated that Lipitor has ~47% market share ahead of its innovator and authorized generic. Management remains confident about retaining the higher share post exclusivity with its generic Lipitor launch in various geographies. But, we remain cautious at margin front as we believe price erosion would be steep (~95%) after the competition creeps in post exclusivity.
Geographical sales Break-up; healthy mix
Sales in North America were up by 145% to US$415mn due to large contribution from the growth in the USA. Sales in the USA for the quarter were US$401mn driven by strong base business and continued exclusivity sales. In India sales for the quarter were Rs5bn, 13% higher yoy led by robust CHC performance.
Adj. EBITDA margin improved by 215 bps qoq to 27% and Adj PAT grew by 13% qoq
Ranbaxy reported an OPM of 27% in Q1 CY12. Management indicated the improvement in EBITDA margins for the quarter is on the back of improvement in the base business and revenues from Lipitor. Adjusted PAT grew by 13% qoq to Rs8.5bn. Rupee depreciation had a large positive impact on the company's results.
Launched Atorvastatin in Germany with Daiichi Sankyo in Mar 2012.
Started export of Atorvastatin to the US from Mohali SEZ, first DF export from India to the USA in nearly 4 years.
Atorvastatin now commands a dominating 47% market share ahead of both the innovator and the authorized generic.
Ranbaxy will market Cravit, an innovative product of Daiichi Sankyo in malaria. This is an interesting dimension of the synergies with Daiichi Sankyo.
The three 180-day marketing exclusivities which Ranbaxy will give up are not the major ones, thus loss of these exclusivities will not have any significant impact on the revenue.
The derivative exposure is now down to US$1.5bnn million from US$1.6bn and on an average, US$40 mn derivatives will mature every month.
Capex: Malaysia: capacity expansion to address business growth ; Nigeria: replacement facility, expected to be online in a year
Launched Synriam™ Malaria drug, 1st ever NDA from India on 25 Apr 2012
Ranabxy’s current quarter performance was better than expected. But, we believe catching up with major pharma companies in terms of valuation will take time. We expect Ranbaxy to trade at lower band of its valuations as it will continue to remain under pressure on the back of 1)concerns over exact liability for its US FDA issues, 2) slow ramp up in domestic market (lower than market growth continues), and 3) continuous pressure at margin front.