What has Zantac recall cost drugmakers? Dr. Reddy's gives a hint

A host of generic drug makers recently recalled their generic Zantac from the U.S. market after the FDA raised concerns about how much of an expected carcinogen was turning up in them. According to one of them, the financial hit for the recall was not insignificant. 

While other drugmakers did not report what the cost of the recall has been, India’s Dr. Reddy’s Laboratories gave a good idea of how much it had to set aside to cover the recall of its 33 different ranitidine products. It reported its North American sales in the most recent quarter were down about $25 million compared to the preceding quarter. It said much of that was to cover the recall and some was because of a supply disruption that has since been solved, according to a Seeking Alpha transcript of its call.  

“Our North America generics recorded sales of $202 million for the quarter and declined by 1% year over year and 14% on a sequential quarter basis,” CEO Erez Israeli said during the call. “The sequential decline was primarily driven by certain issues impacting the quarter such as a, provisions related to nationwide recall of ranitidine product due to NDMA impurities limits following FDA's caution note regarding the same.”

The FDA began testing ranitidine products after the online pharmacy company Valisure alerted it that it had found N-nitrosodimethylamine (NDMA) across the board when it tested Zantac and its generics. 

RELATED: FDA now says impurity level in Zantac and other antacids is too high

Last month, drugmakers started pulling their products off the market. Dr. Reddy's was joined by Novartis’ Sandoz, Apotex, Sanofi and others. Retailers including Walmart, CVS, Walgreens and Rite Aid also stripped the antacid from their shelves. 

It turns out that, as with the case of certain sartan blood pressure drugs, NDMA is formed during the manufacturing of Zantac and its ranitidine generics. They agency has tried to quell consumer concern by pointing out the amounts found in the drug are no more than what might be found in a piece of grilled meat or barbecue sandwich. At the same time, it has been telling drugmakers it is higher than the allowable risk.