Ranbaxy retains its P1+ rating with recent oversea aquisitions

Mumbai, Apr 4 (UNI) India's premier ratings agency, Crisil, has reaffirmed its 'P1+' rating on the commercial paper (CP) programme of Ranbaxy Laboratories Limited, which recently acquired three European pharma companies in a span of one week.

The three acquisitions are Terapia S.A. in Romania, Allen S.p.A, a division of Glaxo Smithkline (Glaxo) in Italy and of Ethimed NV in Belgium.

In Crisil's opinion, the acquisitions would improve Ranbaxy's business profile in Europe with revenues from its European operations last year accounting for 18 per cent its consolidated revenues at USD 200 million.

The acquisitions would add a further USD 100 million to the company's consolidated revenues, enhancing the contribution from Europe, stated the release.

Ranbaxy will fund the three acquisitions from the proceeds of the FCCB issue of USD 440 million (Rs 19.8 billion) it raised in February this year.

Crisil's release pointed out that Ranbaxy will not take over any significant debt from the acquired companies even as it gets access to the product portfolios of these companies.

Terapia has a portfolio of 157 products, and Allen S.p.A and Ethimed's product basket includes 15-20 products each.

Crisil's rating thus continues to reflect Ranbaxy's status as the largest Indian player in the international generics market while holding a strong position in the domestic market as well. The focus on R&D is another plus point for the company.

The rating factors in the growing competition in the global generics market and Ranbaxy's high exposure to the legal and regulatory risks therein, stated the release.

Though Ranbaxy's financial profile suffered last year due to its weak performance in the US market and its high R&D expenditure, Crisil said that it, however, believes that Ranbaxy's strong business profile gives the company the resilience to weather the impact of these factors.

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