Ranbaxy tumbles on delay in launch of generic version of Pfizer’s blockbuster drug

Ranbaxy Laboratories shed 6.28% to Rs 560.65 at 10:21 IST after striking 52-week high of Rs 613.70 on BSE after the Indian drug maker and Pfizer reached an out-of-court settlement on their litigation over the world’s largest selling drug, Lipitor.

The two companies anounced the truce on Lipitor after market hours yesterday, 18 June 2008.

The stock touched a low of Rs 557 so far during the day. The stock had touched a 52-week low of Rs 299.90 on 22 January 2008.

India’s biggest drugmaker by sales has an equity capital of Rs 186.62 crore. Face value per share is Rs 5. The current price of Rs 575.10 discounts its Q1 March 2008 annualised EPS of Rs 11.09, by a PE multiple of 51.85.

According to the settlement, Ranbaxy will launch its generic version of Lipitor, the $12.7-billion cholesterol-lowering medicine, and combination drug Caduet in November 30, 2011 in the US with exclusive marketing rights for 180 days, along with the innovator company. Ranbaxy has agreed to keep the generic versions of the Pfizer's cholesterol pill Lipitor off the US market for extra 20 months. As per the agreement, Ranbaxy will not sell a generic of Lipitor, the world's best-selling drug, until November 2011.

The agreement is specifically between Ranbaxy and Pfizer, and does not involve other patent litigation between Pfizer and other generic drug manufacturers. Lipitor generates annual sales of $8 billion in the US alone. In Canada, the drug rakes in about a $1 billion in sales every year. Caduet, a combination drug of Lipitor and hypertension drug Norvasc, has annual global sales of $400 million.

Daiichi Sankyo struck a deal on Wednesday, 11 June 2008, worth up to $4.6 billion to take control of Ranbaxy. The Japan’s third biggest drug maker agreed to acquire 34.8% from Ranbaxy's founders, the Singh family.

Subsequently on 16 June 2008, Daiichi-Sankyo launched an open offer to acquire up to 20% stake in Ranbaxy laboratories at a price of Rs 737 each, to the minority shareholders of the company. The offer is scheduled to open on 8 August 2008 and closes on 27 August 2008.

Ranbaxy Laboratories is India's largest drug maker by sales. The company manufactures and markets, generic pharmaceuticals, value added generic pharmaceuticals, branded generics, active pharmaceuticals and intermediates.

The company’s net profit declined 10.3% to Rs 103.42 crore on 0.1% fall in net sales to Rs 987.29 crore in Q1 March 2008 over Q1 March 2007.