A deal by Indian compatriot Sun Pharmaceutical to buy Ranbaxy Laboratories is expected to close by the end of the year. But Ranbaxy's deep manufacturing problems will dog it to the bitter end. India's largest generic drugmaker reported a quarterly loss as plant bans sucked out sales and it made a $40 million provision for more legal problems with U.S. authorities.
On Tuesday, the drugmaker reported a loss in its April-June quarter of 1.86 billion rupees (about $30.9 million). That compared with a loss of 5.24 billion rupees (about $86.7 million) in the same quarter a year ago, when it wrote off significant goodwill on facilities after FDA actions. In a bit of intriguing but unexplained news, it said it set aside 2.4 billion rupees, nearly $40 million, to cover "ongoing settlement discussions," according to Reuters.
Last year, Ranbaxy paid $500 million to settle a host of felony and civil charges with the U.S. tied to subpar drug manufacturing. It also operates under a strict consent decree at four facilities where the FDA has said it has had significant quality lapses. In April, Ranbaxy announced that it had been subpoenaed by the Department of Justice for info on its Toansa API plant, which the FDA banned in January for faking analytical results.
The company reported that sales for the quarter were off 8% to 23.72 billion rupees (about $392.7 million). Sales in the U.S., its primary market, fell 11%, Reuters reported, as it felt the effects of two plant bans in the last year, including one in January. Four of the drugmaker's 5 FDA-approved plants are prevented from shipping products to the U.S.
In April, Sun Pharmaceutical and Daiichi Sankyo, which owns controlling interest in Ranbaxy, said that Sun would buy Ranbaxy in an all-stock deal valued at $3.2 billion that would leave Daiichi with a 9% stake in Sun. Sun's managing director, Dilip Shanghvi, at the time said that his top priority is fixing the problems at Ranbaxy that have left the four plants banned from selling in the U.S. Its Ohm Laboratories plant in New Jersey is the only facility still able to do that.