Ranbaxy Labs cedes marketing ops in Mexico to Daiichi

Written by Soma Das | New Delhi | Updated: Feb 25 2012, 09:55am hrs
Ranbaxy Labs has handed over the marketing and distribution of its drug portfolio in the $11-billion Mexican market to parent firm Daiichi Sankyo and is contemplating a similar move in other Latin American markets. This is the second region after Japan where Ranbaxy may cede marketing functions to Daiichi.

"In case of Mexico, the front-end (for Ranbaxy products) would be handled by Daiichi Sankyo. We are evaluating such a move for other Latin American markets as well. At this point in time, we estimate that opportunities arising from such synergy would be in the best interest of the company in the long run, but a final decision on this matter is yet to be taken," Arun Sawhney, managing director, Ranbaxy Labs told analysts.

At just over $80 million, the region accounted for slightly over 4% of the company's global revenue in 2010, which stood at $1.8 billion. But revenue from these markets slumped 24% year-on-year to end at $61 million in 2011, even as global sales of the company went up in 2011 to $2.1 billion. The quarter-ended December 2011 saw the Latin American region contributing just $13 million to the revenue kitty of the company, down 33% from the year-ago period. The company management attributed lower sales in the region to "continued production supply constraints in the region".

In addition to Mexico, Ranbaxy has presence in Brazil, Ecuador, Peru and Caribbean Islands in Latin American region. "Ranbaxy's performance has been lacklusture in Latin America for the last few years. This was accentuated in the October to December quarter of 2011. Partially, it is because of volatile currency in these markets, but even in terms of drug filings, the company's performance has not been very impressive. This transfer of marketing function seems to be part of the larger restructuring process, said Hemant Bakhru of CLSA, a brokerage firm.