Is it time for Ranbaxy to exit the US market? In reality, apart from increased R&D costs, Ranbaxy has suffered falling margins due to three main reasons. Firstly, Ranbaxy’s gamble on the US generic drugs industry has been mirrored by the entry of a large number of competitors, due to many highly lucrative drugs coming off patent. Secondly, this has led to massive price cuts across the board throughout the US generic industry. Thirdly, even in niche segments, Ranbaxy hasn’t been able to leverage price margins because US still follows government controlled regulated pricing and insurance reimbursement schemes that limit the number of drugs accepted for insurance claims. In spite of the sorry figures, CEO Brian Tempest commented that the targets were within reach, “We have committed ourselves to a series of strategic and investment initiatives that will equip the company favorably to achieve its sales mission by 2007.“ And he perhaps is not all that wrong.
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Source: IIPM Editorial, 2006
