The latest ban saw the companys shares plunging 30.27% to close at R318.85 on the Bombay Stock Exchange.
Though the Mohali plant does not yet export drugs
to the US, Ranbaxy had plans to export high-yielding products from there.
Given there are no sales from Mohali, the import alert has no financial impact. However, hopes for approvals for new products from Mohali have been dashed. We understand Ranbaxy had been working with the USFDA on approval for Diovan from Mohali, HSBC said in a research report.
The FDA action may also delay the launch of other new products by Ranbaxy including a generic version of Roches anti-viral Valcyte and AstraZeneca Plcs blockbuster heartburn and ulcer pill Nexium in the US, analysts said.
Analysts said the move may impact Ranbaxys upcoming approval for Diovan, which would have earned the drug maker around $200 million during its six-month exclusivity period. Sources had earlier stated that Ranbaxy has moved its application for Diovan generic to Ohm Laboratories, its wholly-owned unit in the US, after the FDA issued a Form 483 to Mohali (from where the original application was submitted), earlier this year.
Even if the company moves all prospective approvals to Ohm Labs, they will eventually face a capacity constraint at the New Jersey facility, said an industry executive who did not wish to be named.
Mohali was expected to manufacture oral solid products for export to the US, EU and other countries. US accounts for more than 40% of Ranbaxys sales. During the April-June quarter, it clocked better-than-expected sales of Rs 770 crore in US market.
Ranbaxy, 63.5%-owned by Japans Daiichi-Sankyo, said it had not received any communication from the FDA on the import ban against the Mohali factory. We are seeking information from the USFDA in this regard, the company said.
With Indias generic drug exports to the US growing over 32% to reach $4.23 billion in 2012, the FDA is pulling out all stops to bolster quality and confidence in Indian-made drugs, industry experts said.
Till August 2013, the FDA has issued 20 import alerts to no less than 13 Indian pharmaceutical companies including Ranbaxy, Wockhardt, RPG Life Sciences, Aurobindo Pharma, Unique Chemicals, Micro Labs and others. Globally, India is sixth in rank for countries with most FDA import alerts. China had the maximum import alerts since 2011 at 75, followed by Canada and Mexico at 63, Hong Kong at 48, Thailand at 47 and India at 46.
A US law which took effect last year requires the agency to inspect global plants on the same schedule as domestic facilities and to clear its backlog of drug applications within next five years. That could be a reason why we are seeing more inspections in India of late, said Sarabit Kour Nangra, vice-president, research, Angel Broking. She added that FDA compliance norms are stricter than Indian or other global drug regulatory rules, and therefore warnings or import alerts should not be surprising.
The USFDAs authority, however, works both ways. Top Indian drug-makers including Sun Pharma, Lupin, Aurobindo Cipla, and others, got around 110 generic drug approvals from the FDA this year, taking Indias share in the original Abbreviated New Drug Application approvals to nearly 40% in the US market in 2013. The country has over 150 FDA-approved plants.
Among those who got clearance from the FDA after getting a warning or an import alert are Lupin, the top Indian drug seller in the US last year by prescriptions, and Dr Reddys Laboratories, Cadila Healthcare and Aurobindo Pharma.
Karvy Stock Broking analyst Rahul Sharma feels the import alert for the Mohali plant is a major negative for Ranbaxy. The company has had around 18 filings since 2009 from this facility. We believe this would take a very long time, considering the past record of consent decree, he said.
Another drug maker Strides Arcolab said on Monday that a plant of its unit Agila Specialties Private Limited had also received a warning letter from the FDA after an inspection in June.
Mylan Inc in February agreed to buy Agila for $1.8 billion to expand its presence in the fast-growing injectable drugs market, and it was not immediately clear if the FDA action would have any bearing on the deal. Company officials were not available to comment on the impact on the Mylan deal. Strides shares fell as much as 6.7%. It recouped some of its losses later to end down 3.9%.