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Ranbaxy (RANB.BO)
Alert: Takeaways from India Pharma Conference, Dec. 6-7
Takeaways from Mumbai — Ranbaxy presented at our India Pharma MiniConference in Mumbai. Below are key takeaways.
FDA / DoJ Update — Ranbaxy termed recent press reports of a potential US$200-
400m fine as mere speculation. Complete resolution of all issues remains the key
focus. It continues to make good progress with the FDA on key issues but would
not like to elaborate too much or predict timelines at this stage. In the interim,
Ohm Labs has adequate capacity to service the US market. It remains confident of
monetizing all its key pipeline opportunities, as it has done in the past.
Key Pipeline Opportunities — Following the Aricept launch and commencement of
Nexium API supplies to Astra, formulation supplies to Astra would commence in
mid-CY11, Lipitor & Caduet launches are scheduled in Nov '11, Actos in Aug '12,
Valcyte in March '13 & Nexium (exclusivity) in May '14. It has other potential FTF
opportunities, where the product names are not yet in public domain. We believe,
if successfully launched, these would not only boost cash flows but also provide
Ranbaxy significant traction with trade in the US.
Margins still have room to improve — Ranbaxy has made material progress on the
main areas of cost-cutting – viz. restructuring of EU operations, divestment of
manufacturing facilities in China & Vietnam and overall SGA cost reduction. Hive
off of NCE R&D should also help. Ranbaxy expects benefits would reflect fully in
CY11. It also believes that margins would stabilize in the high teens, once all
issues are resolved.
Other Takeaways — a) Efforts to exploit synergies with Daiichi are on; b) foreign
currency derivatives exposure at cUS$900mn; c) expect pick up in growth in the
Indian market to sustain going forward, as benefits of field force expansion
continue to come through.
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