Shares of Ranbaxy, India's biggest Pharma Company by sales, traded lower despite its earnings meeting analysts' expectations in the fourth quarter.
Ranbaxy stocks traded 1.3 per cent lower at Rs 434.35 on the National Stock Exchange at 1355 hours. The Nifty index was down 52 points or 0.9% at 5,431.
The company had reported a 79.8% year-on-year jump in sales at Rs 3,738 crore against Rs 2,086.5 crore in the fourth quarter. However, the company reported a loss of Rs 2,982.8 crore against a loss of Rs 97.4 crore (YoY) on account of one time provisioning for US Department of Justice penalty of $500 million.
Analysts said the big disappointment was a larger payout for the generic cholesterol drug Lipitor by Ranbaxy to Isreal's Teva Pharma.
Ranbaxy's payment to Teva for Lipitor is estimated at 45-50 per cent of sales against earlier estimates of 25-30 per cent. High payout to Teva contributes to reduction of Lipitor SOTP (sum-of-parts) valuation by Rs 15-16 per share.
SOTP values a company by determining what its divisions would be worth if it was broken up and spun off or acquired by another company.
In December, Ranbaxy Laboratories had won the approval to sell generic copies of the $10.7 billion cholesterol pill Lipitor in the US. A deal to share profits with Teva Pharmaceutical Industries (TEVA), a generic-drug maker based in Israel, helped overcome that hurdle.
The approval gave Ranbaxy exclusive rights to sell copies for six months, along with some other Pharma majors, and possibly driving $500 million worth of profits for Ranbaxy.
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