Ranbaxy Laboratories halts drug ingredient shipments from 2 plants as scrutiny mounts

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Ranbaxy Laboratories shares fall as much as 2.7 pct in early trade on suspension news Ranbaxy Laboratories shares fall as much as 2.7 pct in early trade on suspension news
SummaryRanbaxy Laboratories shares fall as much as 2.7 pct in early trade on suspension news

India's Ranbaxy Laboratories, hit by a rash of sanctions by the U.S. regulator, has suspended shipments of pharmaceutical ingredients from two plants amid growing scrutiny of its manufacturing processes by other regulators.

The suspension at the Toansa and Dewas plants, already banned by the U.S. Food and Drug Administration (FDA) from shipping products to the United States, Ranbaxy Laboratories' biggest market, will hit supplies to other key markets such as Europe and India, two people with direct knowledge of the matter said.

Worries about quality control in India's $14 billion drug industry have come to the fore in the past year as plants run by Ranbaxy Laboratories and local rival Wockhardt Ltd have been barred from sending drugs to the United States after falling short of the FDA's "good manufacturing practices".

Margaret Hamburg, the head of the agency, last week completed a 10-day visit to India, which supplies about 40 percent of the generic and over-the-counter drugs consumed in the United States, urging heightened cooperation between Indian and global regulators.

Indian drug regulators inspected Ranbaxy's Toansa facility two weeks ago, Ajay Singla, assistant drug controller of northern Punjab state, where the facility is located, told Reuters on Tuesday. He said he has yet to receive a report on the inspection.

Regulators from other countries including India, Ranbaxy's second-biggest market, have sought clarification on last month's export ban at Toansa by the FDA, Ranbaxy said earlier this month.

Ranbaxy said in a statement on Tuesday that it was "examining processes and controls" at all its active pharmaceutical ingredients (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.

It did not give details about the impact of the move. The sources declined to be named due to sensitivity of the issue.

Without production at the Toansa and Dewas plants, Ranbaxy will be unable to make pharmaceutical ingredients in-house and will have to rely on sourcing from other companies for making generic drugs, which could push up costs, analysts said.

"If they don't supply even captively, which means they will have to buy from outside, that will impact their margins," said Surajit Pal, an analyst at brokerage Prabhudas Lilladher.

Shares in Ranbaxy fell as much as 2.7 percent in the early trading, but recovered later and were trading up nearly 1 percent at 0942 GMT. The stock

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