Ranbaxy [Get Quote], which had fallen behind Sun Pharma [Get Quote] in market capitalisation, is signalling a turn around in its fortunes.

The company recorded a net profit of Rs 426.9 crore (Rs 4.26 billion) in the first nine months against Rs 366.5 crore (Rs 3.66 billion) for the same period in 2006. With another quarter to go, the company expects profits close to Rs 739.3 crore (Rs 7.39 billion).

Contrary to the decline in share prices of leading domestic pharma firms, Ranbaxy shares were on an upswing during the last three months.

"We have been the best-performing pharma company during the last quarter. The trend is likely to continue as shareholders appreciate our decision to hive off risky new drug development research into a separate entity," Malvinder Mohan Singh, chairman and managing director of Ranbaxy, said.

The performance, however, is yet to reflect on its market capitalisation. The company's market cap at Rs 15,733 crore (Rs 157.33 billion) on October 18 is still much below Sun Pharma's Rs 19,946 crore (Rs 199.46 billion). On a four-year term, Ranbaxy remains the only company to register a negative growth compared with Sun, Cipla, Dr Reddy's and Glenmark [Get Quote].

The only silver lining in Ranbaxy's four years' performance is its comparatively stable performance in the last one year, when the company's market capitalisation grew by 14 per cent.

Industry analysts said the recent high-value overseas acquisitions by the company and its US-focused high-risk growth plans were among the reasons for the declining investor interest.

According to Sarabjit Kaur Nagra, an analyst with Angel Broking, Ranbaxy has already taken corrective measures to ensure better performance in the near future.

"Ever since the price erosion in the US markets, the company has diversified its product basket across newer markets. It is more focused on its Para IV challenges today. The company has also cut down its R&D expenses and is improving the profitability."

Malvinder added: "Three years ago, our business plan was to generate 70 per cent of our revenues from the developed market. The acquisitions were also targeted in building capabilities to achieve this. Today, we have re-oriented ourselves. The Q3 has seen over 50 per cent of our business coming from the emerging markets." He explained.

He said the investments made in developed nations would also prove beneficial in its goal towards becoming the top-five generic companies in the world.