FDA signoff on Ranbaxy NJ plant may provide drugmaker relief

The FDA has closed the inspection on the New Jersey plant of India's troubled Ranbaxy Laboratories which promises to be the first good news for the company this year. Its Ohm Laboratories plant is the only one of its facilities currently approved to sell products in the U.S. after the FDA last month banned its third Indian plant from exporting to the U.S.

The company said it had 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 about the New Jersey plant but according to The Wall Street Journal's LiveMint, the EIR could allow Ohm to continue to seek FDA approvals for drugs.

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 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.

- read the LiveMint story