Speedy resolution of the cases pending with US regulatory authorities, maximising synergies with its parent Daiichi Sankyo and improving geographical market spread will be the key growth drivers for the pharmaceutical major

Driven by a surge in sales in the US market, Ranbaxy, the country's largest drug maker, reported an over two-fold jump in its net profit to Rs312.80 crore for the quarter ended 30th September from Rs116.60 crore in the same period last fiscal. The company also benefited from favourable forex movement in the third quarter.

The Gurgaon-based company's total operating income rose to Rs1,934.60 crore for the third quarter, as against Rs1,885.8 crore in the corresponding period previous fiscal.

During the July-September quarter, company posted sales of Rs491.20 crore in the North American region, an increase of over 70%, on the back of robust sales of Valacyclovir, which continued to enjoy a healthy market share of 36%, even after losing exclusivity for the drug. Valacyclovir, an anti-herpes drug, was a first-to-file (exclusive marketing rights for 180 days) product of the company in the USA.

The company's domestic sales stood at Rs493 crore for the third quarter, while CIS region's sales stood at Rs120.90 crore.

The company's Africa sales stood at Rs164.40 crore for the third quarter. The company's active pharmaceutical ingredient (API) business posted sales of Rs108.20 crore in the quarter.

In Europe, the company posted sales of Rs 276.90 crore in the third quarter. In Romania, the firm continued to do well and posted an increase of 20% in revenue.

Further, the company made 37 filings and received 47 approvals in the quarter globally, it said.

"Our key markets continued to perform well attributable in large measure to balanced sales across geographies. This has also been aided by a favourable forex movement," Ranbaxy managing director Arun Sawhney said.

The company said it is co-operating with the US Food and Drug Administration (USFDA) and the Department of Justice for early and comprehensive resolution of all outstanding issues.  The company has put in place enhanced systems and processes in upgrading its manufacturing and research and development facilities.

In 2008, the USFDA had banned over 30 generic medicines manufactured by Ranbaxy after two of its manufacturing plants were found to have not followed the good manufacturing practices prescribed by the US authorities.

During the quarter, Ranbaxy and Daiichi Sankyo announced plans for Ranbaxy to market Tavanic (Levofloxacin) in Romania and South Africa. Levofloxacin is a synthetic antibacterial agent originally discovered by Daiichi Sankyo.

Commenting on the road ahead, the drug major said it will continue to maximise synergies with its parent, Daiichi Sankyo that holds 64% in the company.

"As we move forward, our focus will be on bettering operational performance, maximising synergies with Daiichi Sankyo and on seeking a speedy resolution to the challenges in the USA," Mr Sawhney added.

Brokerage firm Religare Capital maintains a BUY on Ranbaxy with a September 2011 (six-month rolled forward) target price of Rs 720. It adds, "Given the current restructuring exercise and incremental costs, we prefer to value Ranbaxy on EV/sales (versus PE for other companies). We value the base business at Rs630, at 3.4x (15% premium to mean, 55% discount to the sector lead). The NPV of FTF opportunities is at Rs90."

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