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RANBAXY Laboratories, India’s largest drugmaker by sales, reported a loss for the second consecutive quarter hit by foreign exchange fluctuations and a ban on some of its drugs in the US, its largest market.

The drugmaker, controlled by Japan’s Daiichi Sankyo, posted a loss of Rs 679.8 crore for the fourth quarter ended December 31, 2008 compared with a net profit of Rs 187.8 crore during the year ago period. The results failed to match analysts’ expectations.

However, the company’s sales increased 6.4% to Rs 1,909.6 crore, on the back of higher sales in emerging countries.

The company closed the financial year ended 31 December 2008 with a net loss of Rs 914.6 crore, compared with a net profit of Rs 786.6 crore last year. The company’s annual sales rose 8.34% to Rs 7,250.7 crore.

The company did not give any guidance for 2009 due to a volatile foreign exchange market and its problems with the US Food and Drug Administration (FDA) that had banned 30 drugs manufactured at the drugmaker’s two Indian plants.
The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter under review showed a loss of Rs 108.5 crore compared to a profit of Rs 297 crore in the same quarter last year. The company’s EBITDA margin stood at - 5.7% compared to 16.6% last year.

Ranbaxy’s chairman, CEO and MD Malvinder Singh said, “We faced hurdles like the USFDA import alert and forex volatility following an unforeseen global financial crisis. Through several path-breaking initiatives we have secured a future of high growth for the company while we are focused on resolving the ongoing issues that have adversely impacted us this year.”

Analysts said the quantum of the Gurgaon-based company’s quarterly loss was unexpected. “We had estimated a loss of Rs 211 crore. Though the company’s sales have grown by around 7%, the marketing and administrative expenses have increased by 20% during the quarter,” said Ranjit Kapadia, head of research (PCG) at brokerage firm Prabhudas Lilladher. The company’s shares at the Bombay Stock Exchange closed at Rs 186.10, down 8.89%.

Three major non-cash factors — change in accounting standards accounting for $161 million, forex losses at $179 million and US-related provisions at $59 million — primarily contributed to the overall loss for the year, Mr Singh said.

The company’s sales in key overseas markets also dropped. In the US, Ranbaxy’s sales dropped 17% to $89 million during the quarter.

Ranbaxy also missed the December deadline for the launch of its generic version of GSK’s $1 billion drug Imitrex, missing out on a potential earning of $80-100 million. Ranbaxy plans to shift manufacturing of some of its drugs to its USFDA-approved plants outside India or buy new plants abroad to maintain its sales in the US.

Similarly, sales in key European markets declined. The company’s COO Atul Sobti said earnings from European countries fell by 10% due to a weakening of rupee.

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