Ranbaxy Laboratories locked out of its biggest market with API shutdown

Written by fe Bureau | New Delhi | Updated: Feb 26 2014, 20:09pm hrs
RanbaxyThe Ranbaxy scrip fell as much as 2.7% in early trade on the news but closed 1% higher at Rs 367.05 on the BSE. Reuters
Ranbaxy Laboratories Ltd on Tuesday suspended all shipments of active pharmaceutical ingredients (APIs) produced at its Toansa and Dewas plants in order to enable it to review processes and controls.

The two factories are currently banned from shipping products to the US following quality concerns. Last month, the US Food and Drug Administration (FDA) prohibited Ranbaxy from shipping to its biggest market any APIs made at its facility in Toansa in Punjab. The sanction was the latest in a series of regulatory rebukes for Indias largest drugmaker by revenue since Japans Daiichi Sankyo took control of the company in 2008.

A spokesperson for Ranbaxy said supplies to other markets such as Europe and India would not be significantly impacted since only 15% of the companys API requirement was sourced from its own plants, with 85% of raw materials bought from other sites approved by foreign regulators including the US FDA and the UKs Medicines and Healthcare Products Regulatory Authority. APIs are raw materials used to make finished drugs.

The Ranbaxy scrip fell as much as 2.7% in early trade on the news but closed 1% higher at Rs 367.05 on the BSE.

Since the company has voluntarily withdrawn its production, we believe it would have made alternative arrangements for the production of the withdrawn APIs, Sarabjit Kour Nangra, vice-president, research (pharma), Angel Broking, said.

The Toansa ban, which followed similar action on two plants in 2008 Paonta Sahib (Himachal Pradesh) and Dewas (Madhya Pradesh) and Mohali (Punjab) in September 2013, means Ranbaxy can no longer export to the US from India.

Ranbaxy said in a statement on Tuesday THAT it was currently examining processes and controls at all its API manufacturing units. This voluntary decision was taken as a precautionary measure and out of abundant caution to better allow the company to assess and review the processes and controls, it said in the statement.

Ranbaxy also said it has set up a committee to provide oversight on manufacturing and quality operations, systems, organisation and integrity.

Daiichi Sankyo said that it is committed to continuing to offer full support for Ranbaxy to improve quality standards. The temporarily suspended shipments will be resumed once the processes and controls at these facilities are reconfirmed based on internal evaluations and inspections, said Daiichi.

Daiichi is currently fighting a case in a Singapore court against the ex-promoters of Ranbaxy seeking damages for losses arising from a $500-million settlement that the drugmaker signed with US authorities in May 2013 over charges of adulteration of medicines and data manipulation related to testing of drugs.