News: Ranbaxy upbeat on U.S. growth, eyes more buys

(RTR 12/09/2006) Mumbai - India's top drug maker, Ranbaxy Laboratories Ltd., expects strong growth in the United States although pricing pressure in the key market would continue, Chief Executive Malvinder Singh said on Tuesday.

Ranbaxy, which has acquired several firms in Europe this year, is exploring more buys and has many opportunities on the table, he said.

But the United States will be a key market for growth.

"Competition is going to be there but we have a strong presence in that market. Over the next few years, we have a large number of products, that will get approval," Singh told Reuters in a telephone interview.

"There is larger value sitting in the pipeline, larger than what we have today," he said.

Revenue from the United States, which accounts for about a third of Ranbaxy's revenue, is expected to rise to 45-50 percent, Singh said, but he did not say when this will happen.

Ranbaxy is likely to report a net profit of $127 million in 2006, according to Reuters Estimates, more than doubling from a year earlier.

In 2005, the company's net profit tumbled 62 percent to $59 million and its shares lost 42 percent as lower prices in the U.S. market hurt Ranbaxy.

But this year, net profit rose 0.8 percent in the first quarter and 20 percent in April-June, beating analyst forecasts.

Shares in Ranbaxy, which has a market capitalisation of $3.25 billion, ended 0.75 percent higher at 405.15 rupees. In comparison, the main BSE index gained nearly 1 percent.

The company expects good growth in other markets also, Singh said.

"We see growth everywhere, even in Europe. With rising healthcare costs, they will encourage generics further. The number of patents expiring is very large," he said.

In Europe, the company's acquisitions this year included Romania's Terapia for $324 million and firms in Italy, Spain and Belgium.

Singh said Ranbaxy had appetite for more acquisitions.

"We continue to explore opportunities. We have a number of them on the table."

Singh said the company was on track to achieve its target of being one of the top five generic players with $5 billion in annual sales by 2012.

"Clearly a lot of work needs to be done to get there but if you look at the top 10, the first two are very large but the gap between the third and the tenth is not much.

He said Ranbaxy's presence in 49 countries and more acquisitions would help it grow.

"We are looking at doing things which will enable us to have strong organic growth, and complement it with inorganic growth," he said.

Although competition for sales of generics -- cheap versions of drugs out of patent -- remains strong, Indian firms such as Ranbaxy, Cipla and Dr. Reddy's Laboratories Ltd. are likely to show higher sales.

The generics market is expected to expand in 2006/07 with drugs worth $33 billion set to lose patent protection, offering an opportunity to Indian firms that have access to low-cost manufacturing and established production skills.