India's Wockhardt profit freefalls as FDA bans devastate U.S. sales

How bad can an FDA ban on plants be when the U.S. is your primary market? Really bad, India's Wockhardt found out this quarter, with its profit dropping more than $22 million, a 97% freefall. It was the second quarter in which its profits were off more than 90%.

The drugmaker Monday reported a profit of 36.3 million rupees ($591,446) on net sales of 9.48 billion rupees ($154.4 million). That compared with a profit of 1.39 billion rupees, or $22.6 million, in the same quarter a year ago, Reuters reports.

The FDA last year banned two of Wockhardt's manufacturing facilities in India, saying both had been manipulating testing data and passing for sale drugs that were not up to specs.

Wockhardt is not the only Indian drugmaker to face the hard financial realities of getting crosswise with the FDA over quality issues. India's largest drugmaker, Ranbaxy Laboratories, has also had its earnings hurt by having four plants banned. But Ranbaxy was able to turn things around in its last quarter, reporting a profit of 4.78 billion rupees ($78 million) for the quarter ended Sept. 30. That happened after the FDA allowed it to launch its exclusive generic of Novartis' ($NVS) heart drug Diovan from its Ohm Laboratories plant in New Jersey. The drugmaker had reported a loss of about $73 million in the same quarter a year ago.

Wockhardt also has a U.S. plant to fall back on: its Morton Grove facility near Chicago. But operations of that facility were also called into question when the FDA cited it for many of the same issues following an intensive review earlier this year.

The FDA bans on some of India's biggest companies have resulted in pushback from the Indian pharma industry, which has hired a consultant to help it repair its tarnished image in the U.S. The industry insists its drugs are safe and effective and points to the fact that other countries have allowed some of the same facilities banned in the U.S. to continue to sell in their countries. The FDA says it has not targeted Indian drugmakers per se, only those that have failed to keep up with expectations.

- read the Reuters story