Third FDA ban on Ranbaxy threatens its US sales

Sep 17 2013, 10:07 IST
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A spokesman at the FDA's Washington headquarters said the agency has been in touch with the company. (AP) A spokesman at the FDA's Washington headquarters said the agency has been in touch with the company. (AP)
Summary'None of the products manufactured at the Ranbaxy Mohali facility are in short supply.'

communication from the FDA on the import ban on the Mohali factory.

"We are seeking information from the USFDA in this regard," the company said in a statement issued to the stock exchanges.

Daiichi Sankyo and the FDA office in New Delhi could not be reached for comment.

A spokesman at the FDA's Washington headquarters said the agency has been in touch with the company.

India is the biggest overseas source of drugs for the United States and is home to more than 150 FDA-approved plants, including facilities run by global players. Pharmaceutical exports from India to the United States rose nearly 32 per cent last year to $4.23 billion.

'Big risk'

The ban on its Mohali factory comes after the company pleaded guilty in May to US felony charges related to drug safety and agreed to a record $500 million in fines. After falling more than 40 per cent in the months afterwards, the share price had started to inch back up.

But its shares plummeted again on Monday, sinking as much as 32.6 per cent. The stock ended down 30.3 per cent at Rs. 318.50 in the main Mumbai market that fell 0.2 per cent. It has lost more than half its value from its highest level in 2008.

"It is a big risk for them in the long term. Ranbaxy was moving up on hopes of launches from this facility but those expectations are dashed now," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.

Brokerages including HSBC, Edelweiss and India's Anand Rathi Research downgraded Ranbaxy, saying regulatory issues would continue to hurt the company's turnaround plans.

HSBC said Ranbaxy had started shipping generic Lipitor, the widely used cholesterol-lowering medicine, from its Mohali plant in April last year but six months later it recalled some of the batches due to the potential presence of glass particles.

After that Ranbaxy had to stop exporting Lipitor from its Mohali plant, the brokerage said.

"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 of Diovan from Mohali."

The company has been awaiting the US drug regulator's final nod for its generic versions of Novartis AG's hypertension drug Diovan.

The FDA action may delay the launch of other new products by Ranbaxy including a generic version of Roche's anti-viral Valcyte and AstraZeneca Plc's blockbuster

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