Ranbaxy was the biggest loser among BSE Sensex stocks on Tuesday, following selling pressure from institutions.
The scrip declined by 2.53 per cent to Rs 623.25 on the BSE by 14:26 IST. Recovering from its intra-day low of Rs 618.10, the scrip registered a huge volume of over 2.96 lakh shares.
As per market sources, the fall in the scrip was due to huge selling pressure from foreign institutional investors, on reports that the company's UK based subsidiary has been penalised for over pricing few penicillin-based drugs.
However, the amount of the penalty levied on the subsidiary was not known.
Dealers said the selling spree was also attributed to profit-booking, after a recent rise in the scrip. In last two months between 7 November 2002 and 13 January 2003, the scrip of the domestic pharmaceutical company rose by 32 per cent to Rs 639.45, from Rs 485.05.
The renewed interest in the scrip in the last few sessions was on series of positive developments as well as on hopes of impressive quarterly results from the company. Ranbaxy is scheduled to post its fourth quarter (ended 31 December 2002) results on 16 January 2003.
In Q4, Ranbaxy is expected to register a huge net profit growth in the range of 274-328 per cent to Rs 188-215 crore on net sales increase of 43-85 per cent to Rs 814-1,050 crore.
Recently, the company received the US Food & Drug Administration approval for the generic drug Accutane.
Accutane is the brand name for the Isotretinion drug made by Roche Holding AG's. Overall sales of Accutane totaled $523 million in the United States in the twelve months to September 2002. However, as per market buzz, the company is expected to launch the generic version of Accutane by January 2003.
Analysts expect Ranbaxy to gain 30 per cent of the total market share for Accutane, adding up to 10 per cent to its total revenues.
They said the company will outperform the pharma sector index in the long run, following a host of positive developments including the company's good order book position and recent licensing pacts.
Further triggers are believed to be Claritin generics and New Drug Application of Ofloxacin, in addition to its New Chemical Entity and New Drug Delivery System drugs.
Meanwhile, there were reports of Ranbaxy having managed to garner a 90 per cent market share of the anti-infective drug Cefuroxime Axetil in the US market as against 75 per cent in September 2002 with sales exceeding $85million (Rs 400 crore).
Earlier, Ranbaxy reported that its wholly-owned US subsidiary Ranbaxy Pharmaceuticals Inc. has obtained USFDA nod to manufacture and market Amoxicillin and Clavulanate Potassium tablets.
Based on bio-equivalent studies, the formulation has been deemed to be bio-equivalent and, therefore, therapeutically equivalent to the listed drug Augmentin of GlaxoSmithKline.
Total branded sales for the product is expected to be around $1159.7 million (Rs 5,566.6 crore) of which analysts expect Ranbaxy to garner around Rs 150 crore.
Ranbaxy has received its third milestone payment from Bayer AG of Germany for its Cipro OD. It's an NDDS developed by it. Ranbaxy licensed this product to Bayer AG in September 1999.
As per the agreement, the company has to receive totally $65 million and it has received $22 million so far, approximately.
Under the arrangement between both companies, Bayer has obtained exclusive development and worldwide marketing rights for Cipro OD. Ranbaxy retains marketing rights for India and CIS countries along with non-exclusive co-marketing and co-promotion rights for some other markets.
The drug is currently available in more than 100 countries and is used to treat a wide range of hospital and community infections.
For the third quarter ended 30 September 2002, Ranbaxy posted a 78.90 per cent rise in net profit to Rs 159 crore (Rs 89.10 crore) on sales of Rs 804 crore (up 49.4 per cent).
The company's exports nearly doubled to Rs 521 crore during the quarter.
As on 30 September 2002, the promoters' holding in Ranbaxy was 32 per cent, while the public and institutions held 21 per cent and 15 per cent, respectively.