Ranbaxy Drops After U.S. Blocks Import of 30 Drugs

Ranbaxy Laboratories Ltd., India's biggest drugmaker, fell after the U.S. regulator blocked the sale of more than 30 generic medicines made in two factories by the company, because of deficiencies in manufacturing processes.

Ranbaxy, being acquired by Japan's Daiichi Sankyo Co., declined 6.9 percent to 375.50 rupees, the stock's lowest level in more than seven months.

The regulator's action puts at risk Ranbaxy's sales in the U.S., which contributed 24 percent to revenue last year. The drugs being blocked include generic versions of Bristol-Myers Squibb Co.'s cholesterol drug Pravachol and cephalexin, an antibiotic used to treat bacterial infections.

``There will be near-term pressure on Ranbaxy's earnings because of the U.S. decision,'' said Abhishek Singhal, a Mumbai- based analyst at Macquarie Group Ltd. Still, ``Ranbaxy has built up capacity in the U.S. facilities, which can help it offset part of the supply disruptions.''

The Indian company expressed disappointment with the Food and Drug Administration's order and said the agency hasn't given enough time to address the issues raised in the latest letter.

``The company has responded to each concern FDA has raised during the past two years and had thought that progress was being made,'' Ranbaxy, based in Gurgaon, near New Delhi, said in a statement today. ``The company has just received the warning letters that FDA has issued and has not had the opportunity to review those concerns that FDA has determined are unresolved.''

Continued Cooperation

Ranbaxy will continue to cooperate with the agency to resolve the remaining issues, the company said. Ranbaxy supplies 59 drugs to the U.S. market from its three manufacturing facilities located in the nation.

The drugs affected by the FDA's order are from Ranbaxy's plants in Paonta Sahib and Dewas in India, the regulator said.

The agency's letters cite violations, including inadequate sterile-processing operations and record keeping. Drugs made in other Ranbaxy plants aren't being blocked. The products will be blocked until Ranbaxy resolves deficiencies at the plants, according to the FDA.

There is no evidence the Ranbaxy drugs are harmful, though the violations could lead to defective products, Deborah M. Autor, director of the FDA's drug compliance office, said on a conference call with reporters yesterday.

`Import Alert'

The FDA's ``import alert'' barring entry of Ranbaxy drugs isn't related to a U.S. government investigation examining whether the company fabricated data to get its medicines cleared for sale, according to the regulator.

The U.S. Department of Justice is seeking a court order to force Ranbaxy to turn over an audit allegedly showing the Indian drugmaker distributed ``adulterated and misbranded products,'' according to papers filed in a U.S. District Court.

Ranbaxy has denied the allegations and has waived its privilege to withhold the documents.

``Today's actions are clearly warranted based on the extent and the seriousness of the violations uncovered during our inspections of these two sites,'' Autor said. ``The firm is sufficiently out of control that we think an import alert should be put into place until these deficiencies are corrected.''

 

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