Sources: Sun to phase out Ranbaxy brand in U.S.

Sun Pharma Managing Director Dilip Shanghvi

Mention Ranbaxy drugs to some wholesalers and U.S. doctors these days, and they will respond negatively. And so the Ranbaxy brand looks to be on its way out when Sun Pharmaceutical completes its $3.2 billion acquisition of Ranbaxy Laboratories later this year.

Sources tell The Economic Times that while Sun will continue to use the Ranbaxy brand in countries where it has value, in the U.S. drugs made at Ranbaxy facilities will assume the Sun name. Asked directly if the Ranbaxy brand would soon be history in the U.S., Uday Baldota, Sun Pharma's senior vice president of finance and accounts, told the newspaper: "Overall [the] Ranbaxy brand has a value. We will find ways of using it and preserving it."

Sun announced on Monday that it had struck a deal with Ranbaxy's primary owner, Daiichi Sankyo, as well as most of its remaining stockholders, to buy Ranbaxy in an all-stock transaction. Sun's managing director Dilip Shanghvi said getting the four Ranbaxy plants currently banned by the FDA in compliance is the top priority once the deal is done.

But there is no question that the Ranbaxy brand has been tarnished by the publicity surrounding the repeated regulatory lashings it has taken by the FDA. In May 2013, the drugmaker agreed to pay $500 million to settle legal claims with U.S. authorities, pleading to 7 felony charges at the time. But since then, the FDA has banned two more plants for faking analytical testing data and sanitation issues. A warning letter that talked about a lab full of flies was none too beneficial to the Ranbaxy image.

Adding to its difficulties has been an effort by a small group of researchers and doctors to convince lawmakers that foreign-made drugs, particularly from India, don't measure up to the expectations of U.S. consumers. FDA CDER Director Janet Woodcock recently called some of the research the group has relied on flawed, but the publicity has taken a toll. Among those doctors whose perception about Indian-made drugs has changed is Dr. Steven Nissen, head of cardiology at the Cleveland Clinic. "I'm just beginning to realize the gravity of the problem," he said recently. "It's terrible and it is starting to get a lot of traction among physicians."

And a spokesman for Express Scripts ($ESRX), when asked about the quality of Indian drugs, sidestepped the question but acknowledged that the company is paying attention to individual situations concerning quality. "We have increased our surveillance throughout the supply chain," Express Scripts spokesman Brian Henry recently told Reuters.

- read the Economic Times story