Ranbaxy, which has been volatile of late, witnessed good buying support on Tuesday due to the launch of a new drug in India.

The stock of the pharma major was up by 0.9% at Rs 633.25 on the BSE, by the first half of the session. However, it came off from the day's high of Rs 636.50. 64,300 shares changed hands on the counter.

The Ranbaxy Laboratories scrip had turned volatile in recent sessions, after it surged sharply in the last few months to scale a multi-year closing high of Rs 650.20 on 21 January 2003. From that level, the scrip declined in subsequent two sessions to reach a low of Rs 625.30 on 23 January 2003. It once again moved up from that level to slide again. The scrip rose to a high of Rs 650.15 on 31 January 2003. It slipped to Rs 627.20 on 10 February 2003.

The RLL scrip recovered, after the company announced the launch of a new drug for the first time in India. RLL has launched a high-end advanced cephalosporin, Cefprozil, under the brand name, Refzil O. The anti-infective product belongs to the advanced cephalosporin category.

"The company is doing very well on the exports front," said a dealer with a local brokerage.

Last week, RLL launched a next generation anti-retroviral product, Abacavir, for the first time in India. The product, is an anti-HIV drug.

RLL has been aggressively pursuing the US generics market. The global generic business of the pharma major stood at $40 billion in 2002 and is expected to rise to $95 billion by 2005. The US operations have accounted for 44% of its turnover in 2002, which is expected to rise to 47% by 2004 and 49% by 2005. The contribution from the European operations is expected to remain steady at 23%.

However, in the US, generic products are witnessing tremendous price erosion and competition. In the first quarter of the current fiscal, the company has launched amoxicillin, clavulanate potassium (Augmentin) and will soon launch isotretinoin (Accutane).

At an analysts meet held on 21 January 2003, RLL said that it will continue to push its key generics business, but it also plans to diversify into the speciality segment in the medium-term and new drug research in the long-term.

In new drug discovery research, the pharma major will focus on the urology, anti-infective and pulmonary segments.

RLL reported a 45% rise in sales to Rs 776.45 crore in the fourth quarter ended 31 December 2002 over the corresponding previous quarter. The spectacular rise in sales was on account of a 77% rise in exports (inclusive of trade discounts) to Rs 547.10 crore (Rs 5.47 billion). On the other hand, domestic sales grew by a modest 0.5% to Rs 261.70 crore (Rs 2.61 billion). Net profit ballooned by 323% in Q4 to Rs 212.70 crore (Rs 2.12 billion).

At the current Rs 633.25, RLL trades at a price to earnings multiple of 21.5 based on its full year ended December 2002 earning per share of Rs 29.40.

BSE Code: 500359