Indian pharmaceutical giant Ranbaxy on Thursday reported a surprise quarterly net loss, hit by adverse foreign exchange movements, despite an upsurge in sales in its crucial US market.
The headline results were bad news for Ranbaxy's Japanese owner, Daiichi Sankyo, which has seen the Indian firm's earnings hit by a string of US regulatory setbacks since it paid $4.6 billion in 2008 for a controlling stake.
New Delhi-based Ranbaxy Laboratories said in a statement it swung to a net quarterly loss of 5.86 billion rupees ($106 million) for the three months to June from a quarterly net profit of 2.43 billion rupees for the same period last year.
Market analysts had expected the generics heavyweight, India's largest drug company by sales, to post a profit of around three billion rupees in the company's second financial quarter.
The loss came despite a 140-percent jump to 14.7 billion rupees in sales in North America, Ranbaxy's main market, that was powered by the its generic brand of Lipitor, Pfizer's best-selling cholesterol-busting drug.
"Sales and profitability grew in the quarter with overall improvement across major regions," Ranbaxy's chief executive Arun Sawhney said, adding, "US sales were robust."
But adverse currency movements in the quarter dragged the company into the red, Ranbaxy said.
"There was a net charge of $160 million or 8.76 billion on the profit and loss account on account of the forex items," the company said.
Earlier in the year, Ranbaxy reached agreement with the US Food and Drug Administration over a lengthy quality compliance dispute and said it would name an inspector to carry out quality checks on its plants.
It was also able to begin shipping drugs from one of its Indian plants to the United States, marking the end of a 2009 ban imposed by US regulators.
Ranbaxy, which has factories in eight countries, has grown by selling cheap copies of branded drugs that have gone off-patent, and through challenges to patents owned by Western companies.
Daiichi Sankyo bought the Indian firm in a move to diversify globally and break into the fast-growing generics market.
But it faced an uphill battle to turn around Ranbaxy after US authorities alleged the company falsified data, failed to prevent contamination of medicines and kept poor records.
Ranbaxy and Indian rivals such as Dr Reddy's Laboratories and Cipla are all selling in the US market and are expected to see their sales increase sharply in coming years as health providers seek to cut costs.