Ranbaxy Laboratories slipped for the third straight session on Thursday on selling pressure.

By 11:50 IST, the scrip of the domestic pharma major was down by 1.40% at Rs 597.30 on the BSE, off its high of Rs 612. A total of 80,619 shares changed hands on the counter. In three sessions, the scrip lost 6.4% from Rs 637.90 on 10 March 2003.

As per market buzz, General Insurance Corporation of India was said to have offloaded the Ranbaxy stock.

Dealers said the slide on the Ranbaxy Laboratories counter was due to concerns that the company's domestic sales may be adversely affected due to the introduction of the uniform Value Added Tax at the rate of 12.5% from 1 April 2003, replacing the sales tax levied by various state governments. The move has hit the off-take of the company's products by the trader community.

The current rate of sales tax is around 7 to 8% on an average, across the country. However, the uniform VAT is fixed at 12.5%. In addition, considering the trade discounts and commissions, the effective rate is likely to be around 15.5%. Further, the pharma industry is also worried about the treatment of stock-in-trade of goods at the wholesaler and the retailer end. As a result, some of the wholesalers and retailers have requested pharma companies to take back the stocks as of 31 March 2003, while a few others have substantially reduced their purchases. Unless the Centre comes out with clear terms regarding the impact of change over from sales tax to uniform VAT regime, Ranbaxy's domestic pharmaceutical sales for the quarter ending March 2003 will be adversely affected.

The slide on the Ranbaxy Laboratories counter was also attributed to the overall weakness in the market.

Meanwhile, there were reports that Ranbaxy Laboratories is likely to launch its second branded generic product Isotretinoin in the US markets. The market for the drug is estimated at $540 million. Analysts said this was a positive development for Ranbaxy. There were also reports that the company expects to get US regulatory nod within a month for its generic version of antibiotic Augmentin.

However, the Ciprofloxacin drug, which helped RLL to earn huge royalty payments from Bayer, may not garner huge inflows in the near future since the patent on the drug expires in December 2003.

The real triggers for the RLL stock could be the generic version of Claritin and the New Drug Application filed for Ofloxacin, in addition to its New Chemical Entity and New Drug Delivery System  drugs in the pipeline.

Recently, Ranbaxy Pharmaceuticals Inc, a wholly-owned subsidiary of RLL, received tentative approval from the US Food and Drug Administration to market Benazepril Hydrochloride Tablets in 5 mg, 20 mg and 40 mg strengths.

RPI's formulation of the Benazepril Hydrochloride tablet is bio-equivalent to the listed drug Lotensin of Novartis Pharmaceutical Corporation. The branded sales of Lotensin was $332.5 million (approximately Rs 1,600 crore) in 2002, as per IMS MAT, December 2002.

Lotensin is indicated for treatment of hypertension, which can be used separately or in combination with thiazide diurectics. Another angiotensin converting enzyme inhibitor Captopril has caused agranulocytosis, especially in patients with renal impairment or collagen vascular disease. There is no adequate data available to show that Benazepril Hydrochloride tablets (brand name Lotensin) does not have a similar risk.

Analysts feel the approval for launching the generic form of Lotensin may boost RLL's sales as well as profit. It will further expand the company's overall product portfolio and add depth to the number of cardiovascular products offered by it to the US healthcare system.

For the full year, on a consolidated basis, RLL registered a 130.7% rise in net profit to Rs 608.4 crore (Rs 6.08 billion) on net sales rise of 40.3% to Rs 3,823.4 crore (Rs 38.23 billion) in FY 2001

BSE code: 500359

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