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Project Ranbxy
Project Ranbxy
M.VENKAT RAJU
BIPIN KUMAR
SINGH
A.VENKATA
SURESH
NANDITA SADANI
(A30601909
001)
(A30601909
019)
(A30601909
021)
(A30601909
040)
(A30601909
CONTENTS
1. INTRODUCTION
i) FORMATION
ii) COMPANY PROFILE
iii) WORKING DETAILS
2. BUSINESS 0VERVIEW
3. BUSINESS AND FINANCIAL METRICS
(1)
REVENUE VS PROFIT 2004-2008
(2)
PERFORMANCE HIGHLIGHTS
(3)
BUSINESS PERFOMANCE
(4)
DEVELOPED MARKETS
(5)
EMERGING MARKETS
4. DEMAND FORECASTING: FY2010
5. TRADING
6. TURN AROUND STRATEGIES
(1)
ACQUISITIONS
(2)
SHARE HOLDING PATTERN
7. KEY TRENDS AND FORCES
8. LATEST DEVELOPMENTS: AT A GLANCE
9. COMPETITIONS
10.
SUGGESTIONS/ RECOMMENDATIONS
Formation:
Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a
distributor for a Japanese company Shionogi. The name Ranbaxy is a
portmanteau word from the names of its first owners Ranbir and Gurbax.
Bhai Mohan Singh bought the company in 1952 from his cousins Ranbir
Singh and Gurbax Singh. After Bhai Mohan Singh's son Parvinder Singh
joined the company in 1967, the company saw a significant
transformation in its business and scale. His sons Malvinder Mohan Singh
and Shivinder Mohan Singh sold the company to the Japanese company
Daiichi Sankyo in June 2008.
Ranbaxy was established in 1961 and went public in the year 1973.
It has global sales of US $1340 million for the year ended on 31st
December, 2006. It has the largest market in USA (sales appx. US $380
million); then come Europe and BRICS (Brazil, Russia, India, China, South
Africa).
Company Details:
Type
Public
Founded
1961
Headquarters
Employees -
1100 in R&D
Website
www.ranbaxy.com
Working Details:
Ranbaxy has a strong R&D competence that provides a sustainable
competitive advantage to the company. It has scholarly pool of about
1100 scientists, engaged in out-of-box researches. Ranbaxy spends over
7% of its sales on R&D. Licensing of once-a-day Ciprofloxacin formulation,
using NDDS (Novel Drug Delivery System) on a worldwide basis, was the
first international success for the company.
Ranbaxy is focused on Discovery and development of drugs on antiinfectives, urology, respiratory/ inflammatory and metabolic diseases.
Top 20 Molecules:
Simvastatin AmoxiClav Potassium Isotretinoin Amoxycillin and
Combinations
Ciprofloxacin and Combinations Ketorolac Tromethamine Omeprazole
and Combinations
Cefuroxime Axetil Cephalexin Loratadine and Combinations
Clarithromycin Ginseng+Vitamins
Diclofenac and Combinations Ranitidine Cefaclor Cefpodoxime
Proxetil Efavirenz
Atorvastatin
Combinations
and
Combinations
Fenofibrate
Ofloxacin
and
Business Overview
Ranbaxy
Laboratories
Limited
encompasses
the
entire
pharmaceutical value chain from manufacturing to marketing generic
pharmaceuticals; value added generic pharmaceuticals, branded generics,
Active Pharmaceuticals Ingredients (API) and intermediates. As a research
driven company, over 6% of it's revenues are invested in R&D, amongst
the pharmaceutical companies in India, Ranbaxy has the largest R&D
budget with an R&D spend of over US $ 100Mn. In 2008 it demerged its
New Drug Discovery Research division into a separate entity, Ranbaxy Life
Science Research Limited (RLSRL).
The company has manufacturing operations in eight countries with
a ground presence in 49 countries, and its products are available in over
125 countries. It has been aggressively entering into joint ventures and
strategically acquiring companies in past few years. Besides concluding its
acquisition of Be-Tabs in South Africa, which makes Ranbaxy the 5th
largest generic pharmaceutical company in South Africa, the Company
acquired 13 Dermatology products from Bristol-Myers Squibb in the USA in
2007. Ranbaxy made an acquisition of RPG Aventis, France which has
since been renamed as Ranbaxy Pharmacie Generiques SAS. It also has
subsidiaries in Spain, Netherlands, Russia and Australia.
Anti-infectives amoxycillin, ciprofloxacin, and simvastatin are in
Ranbaxy's top selling class of medications. In 2007, the company entered
the
specialty
and
niche
therapeutic
areas
of
Bio-generics,
Oncology,Penems, Limuses, Peptides,etc. The company also has a
groundbreaking anti-malarial candidate in late-phase trials.
2004
36,143.4
2005
35,366.5
2006
40,587.1
2007
41,844.9
2008
44,814.3
2005
2,237.0
2006
3,805.4
2007
6,177.2
2008
10,448.0
2004
5,284.7
Chart Title
45,000.00
40,000.00
35,000.00
30,000.00
25,000.00
20,000.00
15,000.00
10,000.00
5,000.00
0.00
2004
2005
2006
Sales
2007
Profit
Figure 1
Quarter
Sales
Q109
8,022.21
Q209
10,099.18
Q309
11,937.67
Quarter
PAT
Q109
7,777.78
Q209
6,754.50
Q309
1,860.67
2008
12,000.00
10,000.00
8,000.00
Sales
6,000.00
PAT
4,000.00
2,000.00
0.00
Q109
Q209
Q309
Figure 2
Performance Highlights
Net Sales de-grew by 3.7%: For 1QCY2009, Ranbaxy posted Net
Sales of Rs1,554.5cr, a de-growth of 3.7% yoy, which was in line with our
estimates. Net Sales declined on account of USFDA issues in the US and
challenging environment in the EU region. In the EU region and North
America, the companys Sales fell by 14% and 7% in Rupee terms to
Rs283.1cr and Rs404.0cr. However, Emerging market Sales fell marginally
by 2% to Rs837.6cr. The company has stated that it is in discussion with
the USFDA to resolve the issues involving its plants. The USFDA inspection
of Paonta and Dewas facilities is likely to take place during the year. Also,
the company does not expect the current USFDA issue to impact its FTF
settlements.
Amity Global Business School, Hyderabad
7 | Page
For CY2009, the company has guided for Top-line Rs7,000cr, a degrowth of 3% over CY2008. The companys guidance does not include any
upside from the launch of Valtrex. Ranbaxy is working on various
synergies with Daiichi Sankyo, which includes launching of products from
the parents portfolio in India and other Emerging markets. Operating
Margins collapse: Ranbaxy reported Operating Losses of
Rs104cr as against a Net Profit of Rs225cr in the last corresponding
period. Operating Losses can be attributable to realised foreign exchange
losses of Rs84.5cr, shifting of operations to Ohm facility in the US post the
ban of fresh imports from the companys Paonta Sahib facility and ongoing overheads at Paonta Sahib and Dewas facilities. The company
expects a marginal sequential improvement in Operating Margins by
restructuring costs.
Net Loss of Rs761cr: Ranbaxy reported a Net Loss of Rs761.3cr for
1QCY2009 primarily on the back of Rs1,046.1cr MTM losses on foreign
hedges and FCCBs. The company has stated it has around US $1.4bn
hedges, which are long term in nature. For CY2009, the company has
guided for a loss of around Rs800cr provided that there is no further
Rupee depreciation and no adverse impact from the USFDA front.
Y/E
Dec
(Rs
cr)
CY2007
6,6
41
10.
5
774
.0
51.
5
Net Sales
% chg
Reported
Profit
% chg
Adj Net Profit
554
CY2008
7,2
22
CY2009E
CY2010E
7,51
7
914.6
6,45
0
10.7
813.9
440
.6
-62
334.
2
8.7
16.5
408.
7
Business Performance
For the quarter, the company posted Net Sales of Rs1,554.5cr
registering 3.7% yoy de-growth. Emerging markets, which accounted for
54% of the companys Total Sales, de-grew by 2.0% to Rs837.6cr.
Meanwhile, the Developed Markets de-grew by 6% to Rs608cr. For
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CY2009, Ranbaxy has guided for Sales of around Rs7,000cr and Net Loss
of Rs800cr. The company expects to break-even in 9MCY2009 provided
there is no further Rupee depreciation and adverse impact on account of
USFDA. The guidance does not include any upside from the launch of
Valtrex. Ranbaxy is working with on various synergies with Daiichi Sankyo,
which includes launching products from the parents portfolio in India and
other Emerging markets.
Developed Markets
For 1QCY2009, the North American region comprising the US and
Canada posted 7% de-growth to Rs404.0cr. The US market de-grew by
14% yoy to Rs340.1cr despite of rupee depreciation primarily on account
of the US ban on products from the Paonta Sahib facility. During the
quarter, the company received four ANDA approvals from the USFDA.
Imitrex was launched during the quarter in the US. The company is
investing towards increasing its manufacturing capacity at its Ohm facility.
The company expects to begin supplying Nexium API to Astra Zeneca by
4QCY2009.
Ranbaxy stated that it is in discussion with the USFDA to resolve issues
at its plants. The USFDA inspection of Paonta and Dewas facilities is likely
to take place during the year. Ranbaxy believes that supply from its
Dewas facilities could start again if the USFDA finds the plants GMP
compliant post the inspection. The Canada market grew at a faster pace
of 57% yoy to Rs63.9cr and the company currently ranks seventh with a
4% share in the Generic market.
In the EU region, the company recorded Sales of Rs283.1cr, a degrowth of 14% yoy primarily on account of currency devaluation and
channel de-stocking. Ranbaxy has adopted a cautious view on the EU
region with focus shifting to Profitability replacing its earlier Volume-based
approach. Further, it is reducing its fixed costs in the UK and Germany
market.
Emerging Markets
During 1QCY2009, the CIS region de-grew by 8% yoy to Rs86.5cr
primarily on account of currency devaluation and stringent credit
management adopted by the company. The Asia-Pacific region recorded
Sales of Rs109.2cr growing at 9% yoy. In India, the companys Sales
during the quarter stood at Rs325.8cr, a yoy growth of 9% as the
company continues to maintain its second rank in the domestic market
with 4.8% marketshare. The company also launched the first product
Olvance from Daiichis product portfolio. The company also plans to scale
up Daiichis products in India and other Emerging markets.
Business Segments
There are three basic business divisions: pharmaceutical dosage
forms, active pharmaceuticals ingredients (API) and allied business which
comprises of animal healthcare, diagnostics and a range of other
products. Of these, the pharmaceutical dosage forms division is the
largest sector, accounting for two thirds of annual sales.
Dosage Form Sales (94% of total revenue) the dosage form sales
grew from 91% of global sales in 2006 to 94% of global sales in 2007. It
comprises the majority of Ranbaxys sales, including sales of generic
pharmaceuticals, value added generic pharmaceuticals and branded
generics.
API (Active Pharmaceutical Ingredients & Others) (6%) Ranbaxy
supplies API to leading generic companies in more than 50 countries. The
API division has in its portfolio over 50 products covering a wide
therapeutic range such as Cardio-vasculars, Anti-infectives, Anti-ulcerants,
Anti-diabetics, Anti-depressants, Anti-virals and others. In 2001 Ranbaxy
identified Consumer Healthcare as its new business area with the launch
of 4 brands: Revital, Pepfiz, Gesdyp & Garlic Pearls. During 2006, the
business registered sales of US $ 19 Mn registering a growth of 19%.
Sales in Crores
2004-05
36,143.40
2005-06
35,366.50
2006-07
40,587.10
2007-08
41,844.90
2008-09
44,814.30
50,000.00
45,000.00
40,000.00
35,000.00
30,000.00
25,000.00
Sales in Crores
20,000.00
15,000.00
10,000.00
5,000.00
0.00
2004-052005-06 2006-07 2007-08 2008-09
Profit in Crores
2004
5,284.70
2005
2,237.00
2006
3,805.40
2007
6,177.20
2008
10,448.00
Profit/Loss in Crores
12,000.00
10,000.00
8,000.00
Profit/Loss in Crores
6,000.00
4,000.00
2,000.00
0.00
2004
2005
2006
2007
2008
Comparison(in
Crores)
Nil
2005-06
3,047.70
2006-07
-1,568.40
2007-08
-2,371.80
2008-09
-4,270.80
2006-07
2007-08
2008-09
-1,000.00
-2,000.00
-3,000.00
-4,000.00
-5,000.00
Trend analysis:
The equation for the straight line trend is Y = a + bx ,
Where a is an intercept, and b shows impact of independent variable;
the Y intercept and the slope of the line are found by making substitutions
in the following normal equations:
Y = a + b x
XY = a x + b x2
To calculate the demand forecasting, last 5years Sales (in Crores) are to
be taken.
Years
200405
200506
200607
200708
200809
N=5
Sales in
Rs.crores
(Y)
X2
XY
36,143.40
36,143.40
35,366.50
70,733.00
40,587.10
1,21,761.30
41,844.90
16
1,67,379.60
44,814.30
25
2,24,071.50
Y =
198756.20
X = 15
X2 =
55
XY =
620088.80
32,605.18
2,382.02(1)
Y2006
=
32,605.18
2,382.02(2)
Y2007
=
32,605.18
2,382.02(3)
Y2008
=
32,605.18
2,382.02(4)
Y2009
=
32,605.18
2,382.02(5)
Y2010
=
32,605.18
2,382.02(6)
34,933.20
37,369.22
39,751.24
42,133.26
44,515.28
46,897.30
TRADING
In 1998, Ranbaxy entered the United States, the world's largest
pharmaceuticals market and now the biggest market for Ranbaxy,
accounting for 28% of Ranbaxy's sales in 2005.
For the twelve months ending on 31 December 2005, the company's
global sales were at US $1,178 million with overseas markets accounting
Amity Global Business School, Hyderabad
15 | P a g e
for 75% of global sales (USA: 28%, Europe: 17%, Brazil, Russia, and China:
29%). For the twelve months ending on December 31, 2006, the
company's global sales were at US $1,300 million.
Most of Ranbaxy's products are manufactured by license from
foreign pharmaceutical developers, though a significant percentage of
their products are off-patent drugs that are manufactured and distributed
without licensing from the original manufacturer because the patents on
such drugs have expired.
Shareholding Pattern
In November 2008, Japanese Pharma Daiichi Sankyo Company
(4568-TO) completed the takeover of the company from the founding
Singh family in a deal worth $4.6 billion by acquiring 63.92% stake in
Ranbaxy.
63.92%
13.18%
9.57%
5.30%
4.16%
FII's
Others
1.72%
NRI's/OCB's/Foreign Others
0.14%
Competition
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20 | P a g e
RECOMMENDATIONS/SUGGESTIONS