Problems for Daiichi Sankyo’s Indian subsidiary Ranbaxy laboratories are far from over. Already coping with an import alert from the US Food and Drug Administration (USFDA) on its two manufacturing facilities, the company was again slapped with a ban by the US health regulator on import of products from its fourth plant. With the latest ban, all drug shipments of Ranbaxy to the US have come to a complete standstill.
Citing manufacturing norm violations, the USFDA prohibited Ranbaxy laboratories from distributing drugs produced at its Toansa facility in Punjab, including medicines made by the company’s Ohm laboratories facility in New Jersey. As per the order issued by the USFDA on Thursday, Ranbaxy is also prohibited from providing active pharmaceutical ingredients from Toansa to other companies, including other Ranbaxy facilities that make products for American consumers.
“We are taking swift action to prevent substandard quality products from reaching US consumers,” said Carol Bennett, acting director of the Office of Compliance in the FDA’s Center for Drug Evaluation and Research. Furthermore, Ranbaxy will not be permitted to resume manufacturing and distributing active pharmaceutical ingredients for FDA-regulated drugs from Toansa until the USFDA is satisfied that the company has addressed manufacturing quality issues at the facility.
It has been over five years now that Ranbaxy has been constantly coming under the US health regulator’s scanner. Company’s key facilities at Paonta Sahib in Himachal Pradesh and Dewas in Madhya Pradesh have already been under a US import alert since 2008. In May 2013, Ranbaxy pleaded guilty to the charges related to the manufacture and distribution of certain adulterated drugs made at the Dewas and Paonta Sahib units and also agreed to pay $ 500 million to US authorities as penalty.
Then in September last year, the USFDA imposed another import alert on the company’s Mohali plant in Punjab for violating current good manufacturing norms. Now after its Toansa plant also being banned by the USFDA, the company is now required to hire a third-party expert to inspect the facility and certify to the US authorities that the plant and its methods and controls are adequate to ensure continuous compliance with current good manufacturing practices.
Reacting to the recent ban imposed on the company, Arun Sawhney, Managing Director and CEO of Ranbaxy said, “This development is clearly unacceptable and an appropriate management action will be taken upon completion of the internal investigation.” As per the official statement issued by the drug manufacturer, the company expressed disappointment towards the import ban and apologised to all its stakeholders for the inconvenience caused by the suspension of shipment. The statement further added, “Ranbaxy would cooperate with the USFDA and comply with the consent decree in both letter and spirit.”
Talking about the impact of the ban on the company, Sarabjit Kour Nangra, VP (Research Pharmaceuticals) from Angel Broking said, “With this import alert, the operations of the company in US business which contributes around 40 per cent could come under impact, unless it can compensate for the same at the earliest and mange a smooth supply of key raw material.”
She further added that the banned plant is estimated to manufacture around 70-75% of its active pharmaceutical ingredient requirements. Company had reported Rs 788.85 crore overseas sales during the July- September quarter in the current financial year. Of the total overseas sales, company reported US quarterly sales of $ 125 million which now analysts expect would be impacted.
The USFDA ban would dent the company’s financial performance in the coming quarters but it had an immediate impact on Ranbaxy’s share on the Indian stock exchanges. On BSE, Ranbaxy’s stock price crashed by 19.54 per cent while on NSE, the share price plummeted by 18.94 per cent as investors and institutions resorted to heavy selling. Daiichi Sankyo’s stock listed on Japanese stock market Nikkei also tumbled 5.8 per cent to near its three month low.