Mumbai, Sept. 16: Ranbaxy Laboratories is in trouble with the US drug regulator once again.
The US Food and Drug Administration (USFDA) has issued an import alert last Friday against Ranbaxy’s Mohali unit. The alert means that Ranbaxy will not be able to ship products made from the facility to the US, the world’s biggest market for pharmaceuticals.
The FDA said the import ban had been issued as the Mohali facility did not conform to current good manufacturing practices (GMPs). The development is seen as a huge setback for the Daiichi Sankyo Co subsidiary.
The Ranbaxy stock plunged by over 35 per cent in the morning. At the close of trading on the Bombay Stock Exchange, it had lost over 30 per cent, or Rs 138.40, at Rs 318.85.
Investors mauled the stock and chose to ignore Ranbaxy’s clarification — issued in response to media reports — that it had not received any communication from the USFDA.
“We are seeking information from the USFDA in this regard,” the company said in a statement issued to the stock exchanges.
For Ranbaxy, the adverse development comes months after it agreed to pay $500 million in civil and criminal fines under an agreement with the US Department of Justice (DOJ).
The payout came after the USFDA had banned the import of 30 drugs from its two plants in Dewas and Paonta Sahib in 2008 for deviating from good manufacturing practices.
Analysts said the latest import ban would not have an immediate financial impact on Ranbaxy since there are no sales from the Mohali plant. But it will have a huge impact on future revenue streams since several new product launches had been planned from this unit.
For instance, Ranbaxy was set to export from this plant the generic version of Novartis AG’s drug Diovin, which is used to treat high blood pressure. The company was also planning to make Roche’s anti-viral drug Valcyte.
Incidentally, the USFDA had issued a Form 483 for Mohali in 2012, which meant that the regulator had brought to its attention certain manufacturing practices that needed to be rectified. Since the company could not rectify these issues, the Form 483 was converted into an import alert.
Analysts said the latest setback meant that Ranbaxy might now have to look at moving some of the products to its Ohm facility in the US. However, this could be a time-consuming process.
Ranbaxy is understood to have made 36 filings for generic drugs from the Mohali plant. “The Mohali plant is crucial for its future growth. In the last three years, the company has made filings from Ohm and Mohali. The filings from Ohm and Mohali total around $ 6 billion of brand value at present. These new facilities were expected to contribute more than 75 per cent of the business,” said Sarabjit Kour Nangra, (VP-Research, Pharma) at Angel Broking said.
She added that import alerts can take longer to resolve. So, the current development could be a huge setback for the company as it now has only Ohm Labs to service its US business.
“While, we await more clarity from the management on the exact impact on the financials, particularly the profit margins, the company… will trade at huge discount to its peers,” she said in a research note.