Import bans imposed against two of India's largest generic drugmakers are already shaving away their financial performances, even though the worst is yet to come. Both Ranbaxy Laboratories and Wockhardt today reported diminished results, with Ranbaxy being pummeled hard by a variety of factors, including the ban.
Ranbaxy reported a $73.3 million loss after posting a $122.6 million profit in the same quarter a year ago, Reuters reported. The 2012 quarter had been powered by Ranbaxy sales of generic Lipitor in the U.S. Ranbaxy cited foreign exchange losses for part of the decline, as well as the loss of exclusivity for some drugs, but it also was undercut by lower sales in the U.S. The company said it had North American sales of Rs.8.8 billion ($143 million), compared with $167 million in North American sales in the same quarter a year ago.
The FDA in September imposed the ban on the plant in Mohali, India, after inspectors found rampant problems. The drugmaker's other two Indian plants that had sold into the U.S. were put on import alerts in 2008. Ranbaxy in May agreed to pay the U.S. $500 million to settle for problems uncovered at those facilities, but they remain unable to supply the U.S. With the Mohali ban, Ranbaxy now has only its plant in New Jersey approved for sales in the U.S., a market that had provided 40% of its revenues, Reuters points out.
The flip side of Ranbaxy's problems has been the upside for Novartis ($NVS), which last week was able to raise its earnings guidance because Ranbaxy's problems have kept it from getting a generic of Diovan to market. The Swiss drugmaker last week said it expects sales to grow in the low- to mid-single digits and profits to match or better last year's--as long as generic Diovan is absent.
The news out of Wockhardt was not quite as bad. It had its Indian plant in Waluj banned by the FDA in May after inspectors discovered workers trying to hide significant problems with manufacturing and test data. The Indian drugmaker said at the time the import alert could cost it $100 million in lost revenues. In the first full quarter since the FDA took its action, the Indian drugmaker reported a 70% drop in year-over-year pre-tax profits. Its revenues were off 11% for the quarter, falling to 1,197 crore ($194.9 million). It said that U.S. sales were off 19% but still made up 44% ($85.7 million) of the total for the quarter.
According to Reuters, in a conference call with analysts, Managing Director Murtaza Khorakiwala estimated it would take 6 months to address plant problems and perhaps a year before regulators would sign off on upgrades, but he acknowledged it was hard to tell. Part of the issue is that many of Wockhardt's problems extend beyond the FDA ban on the Waluj plant. European regulators have imposed restrictions on three Wockhardt plants in four months, including Waluj.
Special Report: Top 10 generics makers by 2012 revenue - Daiichi Sankyo