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Ranbaxy shares slide 9% on FDA woes

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(Globalpost/GlobalPost)

Shares of one of India's biggest drugmakers, Ranbaxy Laboratories, slid by as much as nine percent Monday after a new warning from US drug regulators about its manufacturing practices.

The New Delhi-based drug manufacturer's stock tumbled to 421.10 rupees before retracing some of its losses to close down 5.42 percent or 25.10 rupees at 438.35 rupees per share.

Ranbaxy's three manufacturing plants are unable to ship to the United States, the company's key foreign market, due to FDA bans imposed earlier for failing to meet "good manufacturing practices".

The latest plant to come under FDA scrutiny is Ranbaxy's Toansa factory in the northern state of Punjab which makes so-called API -- active pharmaceutical ingredients -- for the company's drugs.

Ranbaxy, more than 60 percent owned by Japan's Daiichi Sankyo, said in a statement it had received "form 483 with certain observations as a result of the recent US FDA inspection at its API plant" in Toansa.

FDA Form 483s notify companies of "objectionable conditions", the US regulator says on its website, adding firms should respond swiftly with a corrective action plan.

Ranbaxy did not disclose the "observations" made by the FDA which also did not reveal them.

The company said it was "assessing the observations" and would respond to the regulator "at the earliest".

Ranbaxy said it has already improved its systems and remains "fully committed to upholding the highest standards".

Last September, the FDA banned imports from Ranbaxy's "ultra modern" Mohali plant, whose renovation was supposed to mark a turning point for the generics giant after years of run-ins with US regulators.

Two other Indian manufacturing plants also have been under FDA import bans since 2008.

Daiichi bought Ranbaxy in 2008 believing its dominance in cheaper generic medicines and developing markets would help the Japanese firm grow sales as Daiichi's drugs came off patent.

But the Indian company has been a weight on Daiichi's books ever since due to its US regulatory problems.

The US market traditionally made up some 40 percent of Ranbaxy's sales.

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http://www.globalpost.com/dispatch/news/afp/140113/ranbaxy-shares-slide-9-fda-woes