UPDATED: Ranbaxy's generic of Novartis blockbuster Diovan approved for launch

Sun Pharmaceutical Managing Director Dilip Shanghvi

The long-delayed and highly anticipated launch of generic Diovan is on the way, which is a bummer for Novartis ($NVS) and a huge boost for Indian drugmaker Ranbaxy Laboratories. It is also validation for the decision by Sun Pharmaceutical's owner, billionaire Dilip Shanghvi, who struck a $3.2 billion deal to buy Ranbaxy despite its years of FDA entanglements over quality issues.

Reuters reported that the FDA has approved the drug, and sources tell Indian media that Ranbaxy will be launching its generic of the blockbuster blood pressure drug "immediately."The drug went off patent in the U.S. in 2012, and Ranbaxy has the 180-day first-to-file exclusivity on the drug. But the FDA has bans on four of Ranbaxy's 5 FDA-approved plants because of quality lapses, which had made it impossible for Ranbaxy to get a product to market.

FDA spokesman Christopher Kelly said in an email that the agency Thursday approved, Ranbaxy's Ohm Laboratories, in New Jersey, to make valsartan, the generic of Diovan, in 40 mg, 80 mg, 160 mg, and 320 mg doses. It is the only one of Ranbaxy's 5 FDA-approved plants that has escaped bans for sales in the U.S. Bill Winter, vice president of North American sales for Ranbaxy said in statement Friday that the drug will be launched, "as soon as sufficient supplies are manufactured to meet the needs of the market."

Kelly said Ranbaxy would not disclose who was making the active pharmaceutical ingredient (API) for the drug, saying that was confidential commercial information. He said, "The manufacturer of API used in the production of the finished product was inspected by the FDA prior to this approval and is not named in a consent decree or on Import Alert." A spokeswoman for Ranbaxy would say only that the API is not being made at the Ohm plant.

That suggests that Ranbaxy is getting the API from an outside supplier because its own plant that was slated to make the API was banned by the FDA in January because of quality lapses.The FDA had earlier banned the plant in India where Ranbaxy was expected to make the finished products but there were reports in January that Ranbaxy had applied to the FDA to make the drug at the Ohm Laboratories plant using an active pharmaceutical ingredient produced by another company. Ohm is the only Ranbaxy FDA-approved plant that the agency has not banned from selling in the U.S.

Bloomberg recently estimated that delay of generic Diovan cost payers and consumers about $900 million in the first 18 months. The delay has been a windfall for Novartis, which should have had to deal with plunging sales of the drug, but instead reaped $1.7 billion in the U.S. from the drug last year. Worldwide sales of $3.5 billion were off about 20% last year as generic competition in some other markets took a bite.

There have been court challenges to Ranbaxy's exclusivity, but the FDA contended its hands were tied by law and won a case in 2012 when Mylan ($MYL) tried to force the FDA to allow other generics on the market. Some experts have said the matter has exposed a flaw in process. Ranbaxy also has first-to-file exclusives pending for AstraZeneca's ($AZN) heartburn blockbuster Nexium, which went off patent in May, and Roche's ($RHHBY) antiviral Valcyte, which went off patent last year.

In April, Sun Pharmaceutical announced it had a $3.2 billion stock deal with Ranbaxy's parent, Daiichi Sankyo, to buy the troubled drugmaker. Shanghvi said at the time that his top priority was to fix the problems at Ranbaxy that had resulted in the FDA banning the four plants.

- here's the Ohm Laboratories announcement
- read the Reuters story
- get more from The Economic Times

Special Reports: Top 10 generics makers by 2012 revenue - Daiichi Sankyo | The top 10 pharma companies by 2013 revenue - Novartis