Mumbai, Feb. 5: Ranbaxy Laboratories today indicated that the recent action by the US Food and Drug Administration (USFDA) with regard to its Toansa facility will not make a significant impact on its financials as it only accounts for around 12 per cent of the business generated from the US market.
Last month, the US drug regulator had barred the sale of APIs made from the Toansa unit in Punjab to the US market. This was done after an inspection of the Toansa facility revealed violations of current good manufacturing practice.
The development was seen as a big negative for the company as it could potentially affect future launches of its generic drugs.
Speaking at a conference call after the company declared its results for the fourth quarter ended December 31, 2013, Arun Sawhney, Ranbaxy’s chief executive officer & managing director, said in 2013, 85 per cent of its business in the US market did not come from the Toansa unit and that its contribution was 10-12 per cent. He further hinted that Ranbaxy had alternative arrangements in place for supplying APIs to the Ohm facility, which is allowed to make generic drugs for the US market.
Sawhney, however, pointed out that Ranbaxy would work with the USFDA to resolve its concerns regarding the Toansa unit and that strict action would be taken upon completion of the internal investigation.
The USFDA had pointed out that the Toansa staff retested raw materials, intermediate drug products and finished API after those items failed analytical testing and specifications. It went on to say that these failures were subsequently not reported or investigated.
“We are facing some major regulatory challenges and are disappointed with the developments. I would like to assure all our stakeholders that we would do whatever is necessary to address all concerns of the USFDA and are committed to resolving them as early as possible,” Sawhney said.
The fourth quarter of 2013 saw losses at Ranbaxy narrowing to Rs 158.94 crore compared with Rs 492.44 crore. The improvement in its performance came on the back of higher sales of its Absorica acne drug.
However, Ranbaxy made a provision of Rs 257.4 crore towards the financial impact of the USFDA ban on the import of products made at the Toansa plant.
“Ranbaxy has been strengthening its base business in key markets, including India, eastern Europe and the US, which has helped us recover our margins,” Sawhney said in a statement.
Revenue rose 6.7 per cent to Rs 2,894 crore in the quarter from Rs 2,711.2 crore in the year-ago period.
The better-than-expected numbers from Ranbaxy and statements from its senior management that the impact of the USFDA action on Toansa will be limited sent its shares higher on the stock exchanges. On the BSE, the scrip gained nearly 6 per cent to close at Rs 340.05.