Daiichi grimaces at Ranbaxy, FDA consent decree

Ranbaxy Labs has ended three years of pharma industry suspense by entering into a consent decree with the FDA over manufacturing quality control. In an announcement, CEO Arun Sawhney said he's pleased to resolve this "legacy issue" and begin the "next chapter in Ranbaxy's history."

It's not quite resolved yet, however, and the "next chapter" actually is consent decree operation. Once a manufacturer has reached the consent decree level of FDA attention, fines and fixes take a lot of time and money.

Sawhney said Ranbaxy was "disappointed by the conduct that led to the FDA's investigation," likely referring to its sometimes contentious interactions with the agency during the three-year GMP roller coaster ride. That said, Ranbaxy is proud of the "systematic corrective steps we have taken to upgrade and enhance the quality of our business and manufacturing processes," he added.

However, one pharma analyst cited by Bloomberg noted that the consent decree is not an approval to resume manufacturing, but rather a "plan of action of things to be done to [achieve GMP] compliance."

In terms of liabilities, the U.S. Department of Justice alleged that Ranbaxy falsified raw material and formulation records. In addition, the FDA cited fabricated data when it banned the import of 30 Ranbaxy medicines made at two Indian plants in 2008. The consent decree agreement will pave the way for resuming export to the U.S. from the plants, but no details have been made available.

Ranbaxy said in the announcement it has reserved $500 million to resolve liabilities with the DoJ. That's more than twice last year's profits, according to the Financial Times, and the impact has rippled up the line to parent Daiichi Sankyo. As a result, the Japanese drugmaker lowered its net income and profit projections and cut pay for executives and directors, noted Bloomberg.

- here's the Ranbaxy announcement
- here's Bloomberg's report
- see the Financial Times story

Related Articles:
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QA neglect jeopardizes Ranbaxy's future revenue
Daiichi continues slow turn of Ranbaxy ship
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Ranbaxy preps for FDA at Indian facility

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