Dr. Reddy's, Endo benefit from Ranbaxy manufacturing shortfalls

The FDA has approved Dr. Reddy's and Endo generics of Valcyte

It turns out that Indian compatriot Dr. Reddy's Laboratories, along with U.S. drugmaker Endo Health Solutions ($ENDP), will benefit from the ongoing manufacturing problems at Ranbaxy Laboratories. The FDA has approved their generics of Roche's ($RHHBY) antiviral Valcyte, a drug for which Ranbaxy had an 180-day exclusive, but lost because of regulatory issues.

Ranbaxy last week reported that the FDA had yanked the exclusive for Valcyte, as well as the tentative approval for its generic of AstraZeneca's ($AZN) blockbuster heartburn drug Nexium. The FDA told Ranbaxy it had made the approvals "in error because of the compliance status of the facilities referenced in the applications."

The FDA confirmed in an email that it had approved the Valcyte copies for Dr. Reddy's and Endo but refused to say what is planned for the Nexium copy. It also was approved for production at one of Ranbaxy's Indian plants that the FDA banned in the last year because of questions over employees faking testing data. Asked specifically about the status of that approval, FDA spokeswoman Sandy Walsh said only, "We have no additional information to share about the Ranbaxy applications."

Valcyte turned in U.S. sales last year of $368.5 million, Reuters reports, while Nexium has earned AstraZeneca $2.8 billion in the first three quarters this year, up from $2.21 billion in all of 2013.

Dr. Reddy's is one of the Indian drugmakers that has learned from Ranbaxy's pitfalls, investing in its Indian plants to get workers less directly involved in production and so reduce the chance for human error. V. Venkatanaryan, the head of Dr. Reddy's Bachupally plant, explained to the Wall Street Journal earlier this year that the $147 million investment in plants and equipment that Dr. Reddy's made in the first 9 months of its last fiscal year was aimed at making the process "mistake-proof."

Ranbaxy will soon become part of India's Sun Pharmaceutical, which is hoping to close its $3.2 billion deal to buy Ranbaxy yet this year. Sun's managing director, Dilip Shanghvi has said that his top priority is fixing the problems at Ranbaxy that have left all but one of its FDA-approved plants banned from shipping to the U.S.

- here's the Reuters story