FDA closes out inspection on Ranbaxy New Jersey plant

Ranbaxy Laboratories has spent more than $100 million on its Ohm Laboratories plant in New Jersey since 2006 to quadruple its output. The plant has supported all of the Indian drugmaker's "first to file" applications since 2009. That support became particularly important last month when the FDA banned the last of three Ranbaxy plants in India that provided drugs to the U.S. market. That left only its New Jersey facility to supply the U.S. market and it was pending findings of a December inspection. The FDA has now closed that inspection in what could potentially be the first good news for the company this year.

The company posted to its website an announcement that it has received an Establishment Inspection Report (EIR) from the FDA for its Ohm Laboratories facility in New Brunswick, NJ. The company did not reveal what the report said and in an email Monday a spokesman declined to comment further. Investors took it as a signal that the plant was cleared and the company's shares were up more than 3% on the news.

The signoff by the FDA may provide the generic drugmaker a bit of maneuverability, Hitesh Mahida, an analyst with Fortune Equity Brokers in India, told The Wall Street Journal's LiveMint. She said the approval should set Ohm up to handle more valuable first-to-file products, like a generic of Novartis' ($NVS) blood pressure med Diovan, which went off patent more than a year ago. Ranbaxy was expected to bring its exclusive generic to market, but because of issues at the Mohali plant where it planned to manufacture it, the copy never got released. Diovan produced $4.4 billion in global sales for Novartis last year. Because no generic has come to challenge it, the Swiss drugmaker was able to raise its earnings projections for this year.

According to Ranbaxy's website, all of its "first to file" applications since 2009 have been supported by Ohm Laboratories, and the company has spent more than $100 million on the plant since 2006 to quadruple its output. The signoff follows an inspection at the end of last year.

Last month, the FDA put Ranbaxy's Mohali plant under an import alert because of serious manufacturing problems there. Two other Ranbaxy plants have been banned from U.S. sales since 2008 for producing subpar drugs and then covering up the problems. In May, the company paid $500 million to settle U.S. charges tied to the problems at those plants. But the publicity generated by the settlement set off a backlash in India that had the company defending its drug quality all summer before the FDA import alert on the Mohali plant again pulled the rug out from under those contentions.

- here's the announcement
- read the LiveMint story