FDA's latest action further imperils Ranbaxy's U.S. sales

Ranbaxy Laboratories said it had learned its lesson when it pleaded guilty last May to highly publicized charges and forked over $500 million for making subpar products for the U.S. But the the company is in need of some serious remedial classwork. Since May, another one of its plants has been banned from shipping to the U.S., and now an essential API facility has been handed a raft of observations by FDA inspectors.

Ranbaxy today reported to the Bombay Stock Exchange (BSE) that the FDA found issues at its API plant in Toansa. It said, "The company is assessing the observations, and will respond to the U.S. FDA in accordance with the agency's procedure to resolve the concerns at the earliest." It didn't give any indication of how many, or how serious, the observations might be. Regardless, the confession was a gut-kick to the drugmaker's Indian shares, which fell more than 9% on the news.

With the FDA's import ban in September against Ranbaxy's Mohali plant, all three of its FDA-approved facilities in India have been cut off from the U.S. market, its largest. That leaves only its Ohm Laboratories plant in New Jersey to supply drugs in the U.S., which accounts for  more than 40% of its sales. The latest action could complicate production for Ohm, said Arvind Bothra, an analyst at investment firm Religare in New Delhi tells The New York Times. That is because the Toansa facility supplies about 70% of the APIs it uses in the U.S., he said. "If this plant also comes into FDA issues, it means that the company has not spruced up its quality controls even four years after continued FDA supervision," Bothra said. "That raises concerns whether overall the company would be able to come out of this FDA scrutiny."

The FDA's earlier actions have already been wreaking havoc on the drugmaker's finances. In its last reported financials in October, the company showed a $73.3 million loss for the quarter after posting a $122.6 million profit in the same quarter the year before. But the Indian company today again pledged to get on top of its manufacturing. "Ranbaxy continues to improve its systems and processes, and remains fully committed to upholding the highest standards that patients, prescribers, regulators and all other stakeholders expect from the company. Ranbaxy stays firmly committed to its philosophy of 'Quality and Patients First.'"

- here's the BSE notice
- read The New York Times story (sub. req.)
- more from Reuters

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