No immediate gain for Ranbaxy despite Lipitor patent's expiry

Ranbaxy Laboratories Ltd, which is banking on copies of Pfizer Inc's Lipitor to bolster US sales, may need to rely  more on India to improve growth due to delays in resolving disputes with US authorities.

Two Ranbaxy plants in India were put under an export restriction in 2008 after the US Food and Drug Administration came across manufacturing failures. The decision resulted in a ban on sale of about 30 drugs in the US and delays in approvals for new ones.

Ranbaxy, India's largest drugmaker, is one of two companies that have been allowed to sell generic Lipitor for six months after its US patents expire today.

The company would still need the FDA's final clearance for its copy of the world's best-selling drug, which is expected to generate as much as $650 million for Ranbaxy during the period of exclusivity, according to the median estimate of five Mumbai-based analysts surveyed by Bloomberg.

Pending the FDA approval, Ranbaxy would have to wait it out as rival Watson Pharmaceuticals Inc, the other drug maker permitted to sell the drug, today launches sales of its version of the drug that grossed $10.7 billion in global sales last year. Watson would produce a generic version authorised by New York- based Pfizer that does not need regulatory approval.

Ranbaxy, 64-per cent owned by Tokyo-based Daiichi Sankyo Co, increased its sales force by 60 per cent to 4,000 last year, as part of its Project Viraat, an expansion initiative across rural India. Local sales were higher than  industry figures in some segments for the first half of 2011, falling due to a drop in demand for antibiotics, according to managing director Arun Sawhney who spoke in a conference call on 9 November.

Competition coupled with government-enforced price controls keep drug prices in check in India which is one of the cheapest countries for pharmaceuticals. Drug sales in the country have surged an average of 14 per cent a year since 2005, with rising incomes and surging rates of heart disease, diabetes and cancer.

According to McKinsey & Co, the Indian market, valued at $12.6 billion in 2009, would more than quadruple to $55 billion by 2020.