September 17, 2013
The U.S. Food and Drug Administration (FDA) has banned Daiichi Sankyo-owned Ranbaxy Laboratories' third plant in Mohali from exporting medicines to the United States citing non-adherence to good manufacturing practices, underlining the trend of closer scrutiny of Indian drug makers by American regulators.
The development comes as a huge setback for Ranbaxy as its two other plants in Paonta Sahib and Dewas are already under a similar ban since 2008. In fact, only a couple of months back, the company in the U.S. pleaded guilty for felony charges related to drug safety and agreed to pay fine of $500 million.
The latest ban saw the company's shares plunging 30.27% to close at Rs 318.85 on the Bombay Stock Exchange.
Though the Mohali plant does not yet export drugs to the United States, 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 U.S. FDA 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 Roche's anti-viral Valcyte and AstraZeneca Plc's blockbuster heartburn and ulcer pill Nexium in the United States, analysts said.
Analysts said the move may impact Ranbaxy's 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 United States, 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 United States, European Union and other countries. The United States accounts for more than 40% of Ranbaxy's sales. During the April-June quarter, it clocked better-than-expected sales of Rs 770 crore in U.S. market.
Ranbaxy, 63.5%-owned by Japan's 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.
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