What is a generic drugmaker going to do when the FDA finds flies filling its analytics laboratory and shuts down a yet another plant key to serving the U.S. market? Start looking for other markets. That is what analysts say India's generics leader Ranbaxy Laboratories is faced with now that it has only one FDA-approved facility to work with and its critical API plant is banned from supplying it.
"The Ranbaxy management has a lot of groundwork to do to regain its market share in the U.S. But now, with the U.S. in the backdrop, till it puts back things into place, the company may opt for a more aggressive strategy for other markets," Praful Bohra, a senior analyst for Nirmal Bang, told Business Standard.
It has been focusing on markets like Japan, where its parent Daiichi Sankyo is based, along with places like Australia and Malaysia. The drugmaker also is looking to build its domestic marketshare. But it takes times to build those markets, and even its domestic sales are less than half of what it does in the U.S. Ranbaxy derived about 40% of its $2.3 billion in sales in 2012 from the U.S., while India and Sri Lanka combined made up 17.6%, the newspaper said. One source told Business Standard that Ranbaxy is not even keeping pace with market growth in India.
The FDA earlier cut three Ranbaxy drug manufacturing plants off from shipping to the U.S. because of quality lapses, leaving it with just its Ohm Laboratories plant in New Jersey still able to serve its largest market. Then, last week, the agency put the export kibosh on its active pharmaceutical ingredient (API) facility in Toansa, a plant that produced more than two-thirds of the APIs the drugmaker used for U.S. products.
The troubles have prevented the generic drugmaker from launching an exclusive generic of Novartis' ($NVS) blockbuster blood pressure medicine Diovan, although it reportedly has asked the FDA to allow it to make it at its U.S. plant and is looking to buy the API from another company. Toansa would also have produced the API for a launch of a generic of AstraZeneca's ($AZN) stomach drug Nexium when it goes off patent this spring, according to a report on moneycontrol.com.
But Toansa now joins three other Ranbaxy Indian plants in the doghouse. The FDA made 8 observations during an inspection earlier this month that led to last week's import alert for the Toansa plant, according to a Form 483 inspection report the FDA posted publicly on Monday. Inspectors said workers at the plant had been re-testing products that failed analytics until it could get the results it needed, overwriting old results in its database. The FDA said it had warned the drugmaker more than a year ago that it needed controls on computerized test equipment to keep unauthorized workers from deleting data, but the company had failed to take steps to fix that as well.
As for the "disrepair" inspectors noted: A refrigerator where samples were stored was dripping water, leaving a pool beneath it, and storage cabinets where important documents were stored were broken and didn't close. As for sanitation, windows in the quality control analytics lab were broken and could not be closed, allowing in flies "Too Numerous To Count."
Special Reports: Top 10 generics makers by 2012 revenue - Daiichi Sankyo