Growth Strategies of RANBAXY- Leading Pharmaceutical Company
Summary
- Ranbaxy ranked second in the Indian pharmaceutical market with a market share of 5.0% in 2008. It generated $384m in sales in 2008, an increase of 16.1% over 2007.
- Ranbaxy plans to overcome pricing pressure in the US generics market by shifting focus to complex and difficult to make products and by monetizing the FTF opportunities.
- Ranbaxy has a dominant position in Indian acute therapeutic areas particularly anti-infectives on the back of robust product portfolio and regular launches.
- Its margins are under pressure driven by a high cost structure, restrictive prescription drug pricing in Romania and continued pricing pressure in the US generics markets.
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Table 12: Ranbaxy snapshot
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Headquartered:
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Gurgaon, India
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Incorporated:
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1961
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Revenues (2008):
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$384m
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Employees (2008):
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8,536
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Market share (2008):
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5.0%
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Major therapeutic focus:
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Anti-infectives
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Source: Company information/ IMS Health
Company overview
Ranbaxy
is a subsidiary of Daiichi Sankyo, a Japanese pharmaceutical company. Ranbaxy
is an integrated research-based company engaged in manufacturing and marketing
of generics. It is also involved in the manufacturing of formulations, APIs and
intermediates, consumer healthcare products as well as drug discovery. It
serves clients in more than 125 countries through alliances, partnerships,
joint-ventures and has ground operations in 49 countries.
In
2008, Daiichi Sankyo acquired a 64.0% stake in Ranbaxy resulting in the
creation of a complementary combination of proprietary and generic drugs.
Ranbaxy’s strong global presence along with Daiichi Sankyo’s research
capabilities will enable them pursue growth opportunities across the
pharmaceutical value chain.
Marketed products
The
top 10 marketed products of Ranbaxy based on 2008 sales are mentioned in Table
13.
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Table 13: Ranbaxy top 10 marketed products sales in India ($m),
2007–08
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Drug name
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Therapeutic area
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2007
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2008
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Growth rate2007–08 (%)
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Mox
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Anti-infectives
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21
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24
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15.4
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Revital
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Nutritional supplement
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16
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19
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17.9
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Sporidex
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Anti-infectives
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8
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18
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-1.2
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Cifran
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Anti-infectives
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9
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17
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-11.5
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Storvas
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CVS
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13
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16
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24.1
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Zanocin
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Anti-infectives
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12
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13
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6.1
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Cepodem
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Anti-infectives
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9
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10
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19.4
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Volini
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Musculo-skeletal
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9
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10
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14.0
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Ranbiotic
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Anti-infectives
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7
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9
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29.9
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Mox Clav
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Anti-infectives
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7
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8
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12.6
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Total
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131
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144
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10.3
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Others
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229
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239
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4.3
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Grand total
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360
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384
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6.5
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Source: IMS Health, copyright, reprinted with permission
Therapeutic focus
Major
therapeutic areas of Ranbaxy based on 2008 revenues are general anti-infectives
systemic (accounting for 40.8% of the total revenues in 2008), alimentary tract
and metabolism (16.9%) and CVS (11.6%) as shown in Figure 10.
Research and development
On
the R&D front, Ranbaxy has three new chemical entities (NCEs) in clinical
development stages with focus in anti-infectives, inflammatory/respiratory,
metabolic diseases, oncology, and urology therapies. It is working on about
8–10 R&D programs, and has received approval for initiating phase III human
clinical trials for the anti-malaria molecule, Arterolane, in India. It has
also made significant progress in the area of Novel Drug Delivery Systems
(NDDS) since the launch of Ciprofloxacin OD and has a robust pipeline including
Metoprolol XR, Gabapentin XR and others.
Additionally
Ranbaxy has further expanded its drug discovery and development collaboration
by entering into a new alliance with Merck in the field of anti-infectives in
2008. It also entered into a collaborative research agreement with the
Department of Biotechnology (DBT) in 2008 to develop innovative medicines in
the area of TB. Moreover, it made significant advancement in collaborative
research program with GlaxoSmithKline with the initiation of the phase I
clinical studies on the lead compound for respiratory/inflammation category.
Growth strategies
Rebuilding business in the US market
Ranbaxy’s
revenues and margins have come under pressure partially due to price erosion in
the US (the largest market for the company) generics market. It has adopted a
two-pronged strategy to offset the pricing pressure and drive its business in
the US markets.
Shifting focus towards complex products in the US
Ranbaxy
plans to overcome pricing pressure in the US generics market by shifting focus
to complex and difficult to make products. For this purpose, it plans to
leverage Zenotech’s oncology portfolio in the US. In addition, it also intends
to exploit biosimilars opportunities in the US market once the regulatory
pathway is in place. This shift in focus will help it mobilize the sluggish
growth rate and alleviate the pressure on its margins in the US.
Monetizing the FTF opportunities in the US
Ranbaxy
also plans to drive its business in the US market by monetizing the FTF
opportunities. It has FTF status for 18 ANDAs which will give it an exclusive
180-day marketing period. These opportunities entail huge sales potential
(approximately $27bn based on innovators sales for these products in 2007) for
Ranbaxy. It has already negotiated settlements for five ANDAs including Lipitor
(atorvastatin), Imitrex (sumatriptan), Valtrex (valaciclovir), Flomax
(tamsulosin) and Nexium (esomeprazole). These settlements will help it attain
revenue certainty and enhance product visibility in the US market through
marketing exclusivity during 2009–14. Some of the FTF opportunities of Ranbaxy
are listed in Table 14.
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Table 14: Selected Ranbaxy ANDAs with FTF status
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Product name
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Generic
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Settlement
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Launch date
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Razadyne
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galantamine
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Yes
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Dec-08
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Imitrex
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sumatriptan
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Yes
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Feb-09
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Valtrex
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valaciclovir
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Yes
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Late 2009
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Flomax
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tamsulosin
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Yes
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Mar-10
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Nexium
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esomeprazole
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Yes
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2009–14
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Aricept
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donepezil
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No
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Nov-10
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Lipitor
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atorvastatin
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Yes*
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Nov-11
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* out of court settlement
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Source: Company information/ author’s research
Improving penetration in emerging markets
Ranbaxy
is realigning operations in emerging markets towards pharmaceuticals segments
such as acute and chronic therapy areas in India. In 2008, it launched several
novel molecules in these areas, such as Contiflo ICON (tamsulosin) in the
Urology segment in India. Apart from realigning its product portfolio, it also
restructured its distribution network in emerging markets by shifting focus
towards underpenetrated markets, such as setting up a dedicated sales 'Reach
Out' team to tap the potential of rural India. In other emerging markets such
as Russia, it increased its customer coverage by developing regional
distributors and promoting their products to pharmacies. These initiatives will
enable Ranbaxy to overcome the slowdown in sales growth in the US and European
markets.
Strengthening management involvement in Ranbaxy
Daiichi
Sankyo is strengthening its involvement in the management of Ranbaxy to ensure
integration at the earliest while monetizing their investments in Ranbaxy. Atul
Sobti was appointed the new CEO and Managing Director and Tsutomu Une as the
Chairman after Malvinder Mohan Singh stepped down from the post of Chairman,
CEO and Managing Director in May 2009. This was primarily done to resurrect
Ranbaxy from operational and financial woes. Ranbaxy’s financial performance
had deteriorated considerably after the FDA’s ban on imports of Ranbaxy products
for alleged falsification of data and losses arising from foreign exchange
hedges. This in turn has adversely impacted the margins of the parent company,
Daiichi Sankyo. Through these management changes Daiichi Sankyo aims to
speedily resolve issues with FDA and possible reversal of losses in coming
quarters.
Acquisitions and divestments
Ranbaxy
is pursuing acquisitions to consolidate its presence in developed markets,
expanding its foothold in the emerging markets and to enter emerging sectors in
the pharmaceutical industry such as biosimilars, difficult to develop complex
generics and Novel Drug Delivery Systems. Acquisitions made by Ranbaxy during
2007–09 are listed in Table 15.
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Table 15: Ranbaxy acquisitions, 2007–09
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Year
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Target company
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Rationale
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May-09
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Dermatological and lifestyle products
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To augment dermatology product portfolio
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from Ochoa Laboratories, India
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and increase market share in India.
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Jan-08
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Zenotech, India
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Strengthen presence in high growth marketssuch as biosimilars and
specialty injectablesincluding oncology globally.
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May-07
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Be-Tabs Pharmaceuticals, South Africa
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Consolidate market share and capitalize on generic opportunities
in South Africa.
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May-07
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Dermatology portfolio of Bristol Myers Squibb, the USBristol Myers
Squibb, the US
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Enhanced presence in the specialty dermatology segment.
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Source: Company information/ author’s research
