In order to cut costs and return to profitability, Ranbaxy Laboratories plans to reduce its operations in Europe, reports Business Standard.

The company`s decision to take a bottom-line approach instead of a top line growth model in the world`s third largest medicine market has come after extreme pricing pressures battered the profitability of selling several medicines in countries like the UK and Germany.

Ranbaxy reported a net loss of Rs 7.61 billion during the quarter ended Mar. 31, 2009, against a net profit of Rs 1.53 billion during the comparable quarter in 2008.

Continuing economic recession and growing burden on the public healthcare system have compelled several governments in the European region to call for lowest pricing tenders for medicine supplies.

The tender business has resulted in cut-throat competition among off-patent drug makers world over, thereby eroding the profitability of marketing several commonly used medicines in those regions.

Ranbaxy`s revenues from the European region declined 14% on a year-on-year basis during the 3 months ended Mar. 31, 2009. The region recorded sales of USD 57 million as compared to USD 83 million during the January-March period in 2008.

Shares of the company declined Rs 4.35, or 2.42%, to end at Rs 175.75. The total volume of shares traded was 802,430 at the BSE (Friday).