* Loss of 1.86 bln rupees due to one-off 2.4 bln provision
* US sales drop 11 pct in qtr due to ban on India plants
(Adds management comments, details on regulatory issues)
By Sumeet Chatterjee
MUMBAI, July 29 Indian generic drugmaker Ranbaxy
Laboratories Ltd posted a net loss for the quarter to
end-June after making a provision related to "ongoing settlement
discussions" with U.S. government authorities.
The company, which has agreed to be acquired by rival Sun
Pharmaceutical Industries Ltd, did not disclose the
details of the discussions, saying it would be able to give
details once the case has been settled.
Last year, Ranbaxy pleaded guilty to felony charges related
to drug safety and agreed to pay $500 million in civil and
criminal fines under a settlement agreement with the U.S.
Department of Justice.
The company has also been slapped with a slew of regulatory
sanctions in the past year due to violations of standard drug
manufacturing practices at its India plants, hitting its sales
in the United States and Europe, its primary export markets.
Ranbaxy's net loss in April-June was at 1.86 billion rupees
($30.9 million) as it made a one-time settlement provision of
2.4 billion rupees. Analysts had expected it to post a profit of
698 million rupees, according to Thomson Reuters data.
The figure compared with a loss of 5.24 billion rupees in
the year-earlier quarter, when it was hit by losses from foreign
exchange transactions and goodwill booked at overseas units.
Net sales dropped 8 percent in the quarter to 23.72 billion
rupees, including an 11 percent fall in sales in the United
States, where it was hit by a spate of rebukes by the Food and
Drug Administration (FDA).
The FDA has banned all of Ranbaxy's India-based plants under
a wider scrutiny of India's $15 billion pharmaceutical industry,
which is the largest supplier of medicines to the United States.
Ranbaxy's U.S. business prospects have recently improved,
however, after it received FDA approval to launch a cheaper copy
of Novartis AG's blood pressure pill Diovan last
"We continue to work towards growing our base business with
focus on emerging markets, while at the same time, restoring the
business on growth trajectory in our traditional markets such as
the USA and Europe," Chief Executive Arun Sawhney said in a
Ranbaxy was the first company to file for FDA approval to
launch generic versions of two other top-selling drugs -
AstraZeneca Plc's blockbuster heartburn drug Nexium and
Roche's antiviral Valcyte.
They are pending final approval from the FDA.
"We believe we have the exclusivity, and we will launch the
products once we get the approvals from the FDA," Sawhney said.
The first drugmaker to launch a copy of a patented drug in
the United States is usually entitled to six months of
exclusivity to sell it, providing a big boost to earnings before
rivals launch their generic versions.
In India, the company expects a government decision to cap
the prices of more than 100 drugs used to treat diseases ranging
from diabetes to HIV will hit its revenue by 1.2 to 1.5 percent,
Sun Pharmaceutical, a bellwether in India's pharmaceutical
industry, agreed in April to buy Ranbaxy from Japan's Daiichi
Sankyo Ltd for $3.2 billion, creating the world's
fifth-largest maker of generic drugs.
The Mumbai stock markets were closed on Tuesday for a public
($1 = 60.1150 Indian Rupees)
(Reporting by Sumeet Chatterjee; Editing by Sunil Nair and Jane