India's Ranbaxy Laboratories suffered a 52 percent fall in quarterly profit Thursday as currency volatility offset bumper sales of generic drugs and said its chief executive will step down next week after just over a year in the job.
The company gave no reason for the surprise departure, effective Aug. 19, of Atul Sobti, who is also managing director.
Arun Sawhney, now president of the company's global pharmaceuticals business, will take his place as managing director.
Ranbaxy reported an April-to-June net profit of 3.3 billion rupees ($72 million) compared with a profit of 6.9 billion rupees ($139 million) a year earlier.
The fall was due to large foreign currency gains in the June 2009 quarter, which were not replicated this year, said Bino Pathiparampil, an analyst at Mumbai's IIFL Capital.
But the drop in profit was less than expected, reflecting bumper U.S. sales of Ranbaxy's generic version of Valtrex, a blockbuster herpes drug made by GlaxoSmithKline.
A poll of 21 analysts by Thomson Reuters had forecast net profit of 1.3 billion rupees.
"If we remove the U.S., overall it's continuing to be dull in terms of growth and profitability," Pathiparampil said.
Ranbaxy's period of exclusive sales for generic Valtrex ended during the June quarter and the company has no prospects for a replacement until December.
"There is going to be some pressure going forward," Pathiparampil said. "The next big exclusive product in December is potentially Aricept but we're not sure that's going to happen."
Aricept is an Alzheimers drug sold in the U.S. by Pfizer and Japan's Eisai Pharmaceuticals.
Sales for the April-June quarter were 21.0 billion rupees ($458 million), up 22 percent from the same period last year.
Developed markets led growth, with sales up 63 percent as North American revenues doubled on strong demand for generic Valtrex.
Emerging market sales, which account for half of revenues, grew 6 percent, with the launch of 31 new products in India, the company said.
Ranbaxy decided to refocus on generics during the quarter, transferring its drug discovery research to the India unit of Japan's Daiichi Sankyo, which paid $4 billion for a controlling stake in Ranbaxy in 2008.
The U.S. Food and Drug Administration banned over 30 of Ranbaxy's generic products in 2008 due to manufacturing quality concerns at some plants. Then, in February 2009 U.S. regulators said Ranbaxy lied about some test results.
Those issues have not yet been resolved, and Ranbaxy said Thursday it "continues to cooperate" with the FDA and Department of Justice.
The stock closed down 0.5 percent, at 445.2 rupees ($9.5) a share, on the Bombay Stock Exchange in an otherwise flat market.