Ranbaxy, Cipla results ahead of expectations: I-Sec

Rajesh Vora of I-Sec feels that Ranbaxy and Cipla results are ahead of expectations. He also adds that Ranbaxy garnering 50% market share of generic Zocor, is heartening.

According to Vora, Dr Reddy's and Ranbaxy have strong product launch visibility. He also believes that Ranbaxy is confident of lauching 75% of pending ANDAs.

A: I think both the results were pretty good ahead of our estimates. As we read from the consensus, they have broadly beaten the consensus as well. Clearly, both these stories have different drivers, in terms of profitability growth and topline growth. But both the results were extremely good and it should bring in some sort of greater interest. It gives some pointer to the results that will come out in this quarter for the rest of the companies.

A: Ranbaxy directly files its own ANDA while Cipla follows a partnership model. So in this context, we need to look more at Ranbaxy. Ranbaxy launched Simvastatin 80 mg on June 23, 2006 for which they have a 180-day exclusivity. What is heartening is that they have gained more than 50% market share so far, despite aggressive pricing tactics adopted by Merck, which innovated Zocor.

This is clearly a big positive. I think pricing pressure from last year's base has obviously been the worst. I think pricing pressure will continue and new products will continue to see close to 90-95% of price erosion of the innovator prices. Recently, just a couple of days ago, Mobic, which is Meloxicam got approval.

There are as many as 11 generic companies, who have got the approval. All of them have launched the products and four of them are Indian companies. So clearly, pricing pressure is here to stay but we believe that we are close to a bottom and I think the worst is already there. We are unlikely to see substantial pressure further from where we are today.

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