Ranbaxy faces more enquiries on FDA ban...

A week after the US Food and Drug Administration (FDA) blocked over 30 drugs manufactured by Ranbaxy from its two facilities in India, all major geographies have sought details of the company's exports from India. Sources said that company's major markets including Canada and countries in EU have expressed concern and sought details on the drugs exported to these markets, and the company's action plan on the issue. Drug regulators in developed markets are studying the USFDA ban and seeking details from the company, including drug approvals. When contacted a Ranbaxy spokesperson said: "We are not responding to any media reports". Shares of Ranbaxy hit an 18-month low and closed at Rs 308.85 on Tuesday, a drop of over 11% since Monday, on adverse developments, and fears about its revenue outlook, analysts said. US is the largest market for the company, and contributed revenues of $390 million, while EU's share was $365 million in the company's total sales of $1.6 billion last year. The import alert covers over 30 generic drugs, including medicines such as Simvastatin, Pravastatin, Ciprofloxacin and Gabapentin, Ciprofloxacin HCl, Clarithromycin and Lamivudine. Even though the FDA clarified that the move was preventive and the drugs were safe, regulatory bodies across major geographies are not taking any chances and want to be reassured. Analysts say that the company is being dragged down by negative news and a slowdown in revenues is expected, particularly in the US revenues. The manufacturing deficiencies for issuing the import alert include potential cross-contamination of drugs, inadequate sterile processing and failure of keeping records. The Ranbaxy issue is a dampener for the country's generic industry. "I think the US FDA-Ranbaxy issue has created a significant issue for the Indian pharma sector. Ranbaxy is the flag bearer for the Indian generics industry and the US FDA action is bound to have a serious impact on the perception that other markets have on the quality of Indian products," says Probir Rao, managing director, investment banking, UBS Securities India. Experts are concerned about the loss of reputation of one of the top 10 generic companies in the world. "The development has destroyed the brand which Ranbaxy had carefully built over the last 20 years. The image created is that of spurious drugs, while this is not the case. Investigations have been on for the last two years, hundreds of batches have been tested and documents have been sought, but the regulator has not found the company lacking in quality issues," sources said. Some feel that the issue had assumed "political connotations". "The manner in which the company has been constantly under attack, and the issue has been kept alive, shows that there may be lobbying to create roadblocks for the company," experts added. Earlier US Congressmen have expressed doubts over the quality of inspections conducted by the US FDA on Ranbaxy's manufacturing facilities before giving them marketing nod to generic medicines, alleging that the company supplied "fraudulently approved and manufactured" medicines. However, analysts feel that the company has managed the issue poorly, and treated it in a lackadaisical manner. "While the ban is a negative for the company, I see this as a one-off incident. However it could impact the image of Indian pharma if left unresolved. The issue is already a messy one that need not be further aggravated by politicising the same or looking for devils where none exist. I am confident that the company has the manufacturing and regulatory skill set to overcome this ban", says Sanjiv Kaul, MD ChrysCapital, and an ex-Ranbaxy executive.

Source: The Times of India