Ranbaxy Faces New US Regulation Woes

Ranbaxy Faces New US Regulation Woes

In May, Ranbaxy pleaded guilty to U.S. charges of selling adulterated antibiotic, acne, epilepsy and other drugs and agreed to a record $500-million fine. The episode was a huge hit to its image.

MUMBAI -- Shares in Indian generic drugs giant Ranbaxy Laboratories crashed as much as 35% on Monday after the US Food and Drug Administration suspended imports from one of its factories.

The FDA issued an alert on Friday against the factory in Mohali in the northern state of Punjab, spelling more bad news for Ranbaxy which is struggling to put a near decade-long history of US-led regulatory action behind it.

A spokesman for Ranbaxy, which was bought by Japan's Daiichi Sankyo group in 2008, said "the company has so far not received any communication from the U.S. FDA" and it was seeking information.

The FDA website did not explain the reasons for the "import alert."

Ranbaxy, one of the biggest generic drugs makers in the world, slid to a day's low of 297.25 rupees on the Bombay Stock Exchange in early trading, down 34.99%, before recovering to 329.50 rupees, down 27.94%.

In May, Ranbaxy pleaded guilty to U.S. charges of selling adulterated antibiotic, acne, epilepsy and other drugs and agreed to a record $500-million fine. The episode was a huge hit to its image.

The U.S. fraud, uncovered over eight years, was exposed by a whistle-blowing ex-employee who said Ranbaxy created "a complicated trail of falsified records and dangerous manufacturing practices."

Ranbaxy imported adulterated batches of drugs made in its Paonta Sahib facility near the Indian city of Chandigarh, which FDA inspectors said had poor record-keeping and an inadequate testing for the stability of the drugs over time.

The company also admitted to making false and fraudulent statements to the FDA in 2006-2007 on stability tests made on several other export drugs.

The Paonta Sahib facility and another, in Dewas in central India, were blacklisted from producing drugs for the U.S. market.

Ranbaxy is not alone in facing scrutiny from global regulators because of problems at its factories.

In July, Britain's healthcare regulator recalled 16 drugs from Indian pharmaceutical firm Wockhardt after finding deficiencies at one of its manufacturing units in western India.

"The import alert could be a huge setback for Ranbaxy Labs," said Sarabjit Nangra, pharma analyst with Mumbai's Angel Broking, adding that import alerts can take months to resolve.

Ranbaxy will for now have to rely on its New Jersey-based Ohm Labs to service all its U.S. business, Nangra said.

The U.S. is the biggest drugs market in the world and Ranbaxy makes about 40% of its revenues selling drugs there.

India's government has been forced to defend the country's lucrative generic drug industry, which accounts for nearly $15 billion in annual exports.

The country has built a reputation as the "pharmacy to the world" for its production of life-saving generic versions of medicines for poor nations that cost a fraction of those with brand names.

Copyright Agence France-Presse, 2013

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