Ranbaxy's Lipitor Share Declines To 7.7%

Ranbaxy's share in sales of the generic version of Lipitor has sharply declined from 44.5% in first week of Nov 2012 to 7.7% in Dec 2012. The company has voluntarily recalled more than 40 batches of its version of Lipitor from the US market. The recall was forced owing to lab findings of glass particles in the product and production has been stopped until further investigations into the matter.

This would lead to lower revenues for the company in the Dec quarter of 2012 as well as in the Mar quarter of 2013. Ranbaxy in its notification to the stock exchanges dated Nov 23, 2012 had said that it would complete the investigation within two weeks after which it will resume supplies. The company has missed this deadline and is yet to resume supplies.

The generic version of Lipitor (Atorvastatin) has been a key revenue driver for Ranbaxy which raked in more than USD 600 million in revenues (over Rs 3300 crore) in the first two quarters of this calendar year. During this period, Ranbaxy enjoyed a 180-day exclusivity for the product.

The USFDA had said that these minute particles had a very remote possibility of causing any harm to the patients. The recall however is the second instance in case of Ranbaxy since 2008. Earlier, in 2008, the USFDA had banned Ranbaxy's two manufacturing facilities (Paonta Sahib and Dewas) due to its non-compliance with the USFDA norms. The company has been negotiating with the USFDA to get the ban lifted. It has also entered into a consent decree in January 2012 which requires Ranbaxy to comply with the USFDA norms. However, this new instance of glass contamination may cause a serious harm to its efforts to bring the two facilities back in the business.

But as they say, in business, one's loss is someone else’s gain. Ranbaxy's competitors in Atorvastatin market have gained a significant market share after it recalled the drug. The news report says that Mylan and Apotex have gained a market share of 29.7% and 23.9% respectively. Indian firm Dr. Reddy's Laboratories (DRL) has also launched its version of Lipitor in the US since July 2012 and one may expect significant revenues for DRL in the Dec 2012 quarter following these developments.