Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Ranbaxy vs Dr. Reddy's: Which one is better? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Mar 23, 2011

    Ranbaxy vs Dr. Reddy's: Which one is better?

    Evaluating pharma companies is quite a difficult task. From a distance, pharma companies may look more or less similar, but that is not the truth. The companies not only sell their products in India but across the globe. Also, the type of the products can vary depending on the company's strategy. Plus, the need to understand the regulatory aspects is very important.

    In a series of articles starting with this one, we will try and make it easier for you to understand the pharma business. In this article we will compare Ranbaxy and Dr Reddy’s, two major pharma companies.

    Brief History

    Founded in 1961, Ranbaxy is one of India's largest and oldest pharma companies. It manufactures branded generic pharmaceuticals and Active Pharmaceutical Ingredients (APIs) and markets the same across different parts of the world. The company was founded by the Singh family, who later sold their entire stake to the Japanese innovator pharma company -Daiichi Sankyo in the financial year 2008. Currently, Ranbaxy has presence in 46 countries and serves customers in 125 countries.

    Dr Reddy's was founded by Dr Anji Reddy in 1984. It has become one of the largest pharmaceutical companies in India and one of the leading global generic players. This company began its operations by supplying to the Indian drug manufacturers and soon started exporting to less regulated markets. After achieving critical mass, it entered into the regulated markets of the US and Europe. The company management is very proactive and this can be evinced from the fact that it was the first Indian generics company to garner the 180-day exclusivity period for the drug 'Fluoxetine' in 2002. It was also the first Indian company to launch an authorized generic in partnership with Merck for 'Simvastatin' and 'Finasteride'.

    Business Segments

    The segments in which both the companies exist are listed in the table below.

    Business Segments
    Segments Dr Reddy Ranbaxy
    APIs YES YES (Small Presence)
    Generics YES YES (Large Presence)
    Branded Generics YES YES
    Research activities YES NO
    *Ranbaxy will continue to independently develop and later commercialize
    the anti-malarial new drug which is currently in Phase III trials.

    Active pharmaceutical ingredients (APIs) are the main substance used to make the final formulations. Many global pharma firms source the APIs from Indian manufacturers. In this business, Dr Reddy's has a strong footing as compared to that of Ranbaxy.

    The focus for Ranbaxy has always been on the generics business and it has aggressively pursued the same. Dr Reddy's is more diversified as compared to Ranbaxy in terms of business segments. It also has a division which takes care of the contract manufacturing and research business.

    After Daiichi Sankyo acquired Ranbaxy towards the end of 2007, the new drug discovery division of Ranbaxy was hived off from the company in July 2010, thereby making Ranbaxy an even more focused generics player. Dr Reddy's boasts a spending of about 6% of its annual income on new drug R&D. But on the other hand, the cost of new drug discovery research (NDDR) will not have to be borne by Ranbaxy any more.

    In the next article we will focus on the revenue segmentation and a few other financial parameters.

    Ranbaxy vs Dr Reddy's Which one is better? - Series - Next | All Articles



    Equitymaster requests your view! Post a comment on "Ranbaxy vs Dr. Reddy's: Which one is better?". Click here!


    More Views on News

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    The Power of 5 Minutes (The 5 Minute Wrapup)

    Jun 16, 2017

    Here's what you can expect from The 5 Minute Wrapup in the coming months and years.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 01:21 PM