Ranbaxy proved a foundation of strength just ahead of the announcement of results and some amount of it may have been generated by the company's latest achievement in the US.

The scrip of India's largest pharmaceutical company in terms of market capitalisation rose 2.48% to Rs 667.50 by 11:05 IST on Tuesday. This happens to be a recovery from the day's low of Rs 650.10. But the scrip had also peaked at Rs 670.90 earlier. Over 1.19 lakh Ranbaxy shares were traded on BSE so far.

New optimism has surfaced on the counter on Tuesday after the scrip lost 2.24% to Rs 651.35 yesterday. Pharma peer Cipla's poor results had done the stock in yesterday. Even so, the underlying strength of the stock was obvious in the fact that the likes of Salomon Smith Barney and DSP Merrill Lynch had bought 33,000 and 75,000 Ranbaxy shares respectively, on Monday.

There have been concerns over the future growth of pharmaceutical companies, especially after the disappointment from Cipla. However analysts feel the business model differs from company to company and, Ranbaxy Labs, despite facing challenges in the domestic market, is not expected to be constrained in a major way in future due to its strength in the export market.

Ranbaxy Laboratories is scheduled to announce quarterly results today. According to a capitalmarket.com analysts poll, for the quarter ended 31 March 2003, the New Delhi-based pharma major is expected to post a 49% to 60% growth in net profit, in the range of Rs 141 crore (Rs 1.41 billion) to Rs 152 crore (Rs 1.52 billion). Sales for the quarter are estimated between Rs 767 crore (Rs 7.67 billion) and Rs 1,030 crore (Rs 10.3 billion).

Analysts say the company has strong fundamentals, but it faces challenges in the domestic market due to its significant exposure to stagnating therapy areas, limited flexibility in pricing and increasing competition.

Yesterday, reports surfaced that Ranbaxy Laboratories had won tentative approval from the US Food and Drugs Administration to market a generic form of Bristol-Myers Squibb Co's anti-depressant Serzone.

The nod was given for the company's 50 mg, 100 mg, 150 mg, 200 mg and 250 mg dosages of nefazodone hydrocholride tablets. This is the sixth abbreviated new drug application approval that Ranbaxy has won in 2003.

Bristol-Myers' US patent on Serzone, which had sales of more than $260 million in the year to January 2003, is due to expire in September 2003. Other companies that have also got tentative approvals for the drug include Eon Labs Inc, Roxane Laboratories, Mylan Pharmaceuticals Inc, Watson Laboratories and Geneva Pharmaceuticals.

For FY 2002, on a consolidated basis, Ranbaxy registered a 130.7% rise in net profit to Rs 608.4 crore (Rs 6.08 billion) on net sales growth of 40.3% to Rs 3,823.4 crore (Rs 38.23 billion).