Institutional investors cut their exposure on Ranbaxy stock

MUMBAI: The Institutional Investors of Ranbaxy are cutting down their exposure in the stock, as they see challenges for the company in its future first to file product launches, say sources familiar with the matter.

"Investors like Reliance Mutual funds, and couple of hedge funds have already downsized their holdings in the stock", said this analyst from a leading brokerage house. Ranbaxy in November this month launched the generic version of the cholesterol lowering drug lipitor.

This drug which has a market size of $1 billion in US was considered a cash cow for the ranbaxy, which has the exclusive rights to sell the generic version of the drug for 6 months. But the run up to the Lipitor launch was no less than a Bollywood pot boiler.

Ranbaxy, who had a long standing dispute with the US food and Drug Administration (USFDA), got the final approval for the drug at the last minute. Ranbaxy entered into a consent decree for rectifying its two banned manufacturing plants in Uttaranchal, by paying a penalty of $500 million, analysts say in a consent decree, it takes minimum three years for the plant to get a US FDA approval.

Considering the regulatory challenges and the tough competition from innovator companies are expected to spoil the party for generic companies like Ranbaxy in the US markers.