Ranbaxy's five-yr roller-coaster ride as Daiichi company

The five years Ranbaxy has been a Daiichi Sankyo company cannot be described as a glorious period for the generic drug maker. Ranbaxy, which used to be the largest pharmaceutical company by sales, slid in the domestic market to rank third-fourth in the past few years. In the global market, the company has faced setbacks following increasing enforcements by the US Food and Drug Administration (USFDA).

While the new management, with many Japanese representatives on board, has repeatedly assured its stakeholders of corrective actions and better compliances, the drug maker appears to have failed to address the problems on the ground.

"The problem is though Daiichi Sankyo has changed the management of Ranbaxy, it has failed to change the people or their behaviour at the ground level. As a result, factories continue to function the way they used to before the Japanese parent came on board," said a sectoral official.

RANBAXY’S TROUBLES

• Two factories in India have come under the US import alert, putting a full stop on supply to the US
• It had paid a fine of $500 million after pleading guilty of fraud
• It had recalled generic Lipitor from the US in November 2012 after glass particles were found in its samples
• Ranbaxy market cap is down to Rs 14,000 cr
• The company failed to gain timely approval for generic Flomax
• Pending applications for Nexium and Valcyte in the US

The latest salvo from the USFDA has come at a time when Japanese Prime Minister Shinzo Abe is coming to India as the chief guest for the Republic Day with a delegation that includes Daiichi Sankyo Chairman Takashi Shoda.

Ranbaxy's market capitalisation has also suffered significantly in the past few years, down to Rs 14,000 crore.  

Ranbaxy's two key units in India, Paonta Sahib (Himachal Pradesh) and Dewas (Madhya Pradesh), were barred from supplying to the US in 2008 just before the acquisition of the company by Daiichi Sankyo. However, the company took four years to reach a settlement with the US authorities and sign a consent decree for taking corrective measures in these facilities. More, the new management pleaded guilty to the US authorities for fraudulent activities and paid a hefty fine of $500 million. Even after all this, the two factories are yet to get a clean chit from the USFDA for resuming supplies to the market. On the contrary, two more factories in India, a newly-commissioned formulation plant in Mohali (Punjab) and an active pharmaceutical ingredient (API) plant in Toansa, have come under the US import alert, putting a full stop on supply to the US from India.

The latest observations by the USFDA after inspecting Ranbaxy's Toansa factory shows the management had failed to put enough checks and balances and implement corrective measures despite the USFDA authorities discussing several issues with the company in 2012. Citing the absence of adequate controls over computersied systems, USFDA authorities said in Form 483, "This is a repeat observation from the previous inspection in December 2012". In another instance, where a significant build-up of melting ice was found in a refrigerator storing working standard sample containers, FDA inspectors noted, "This observation was discussed with the management during the previous inspection close-out meeting in December 2012".

Analysts said Ranbaxy has largely opted for the hybrid model with Daiichi Sankyo where it will use its sales network to market the parent's medicine. "This is not a very promising model for a company like Ranbaxy, which once had its own product pipeline and clocked significant revenue," another analyst said.

The company in five years has lost various product opportunities in the US. Ranbaxy also recalled  generic Lipitor from the US in November 2012 after glass particles were found in its samples. While it managed to monetise some products by entering into partnership for a revenue-sharing arrangement, many key products such as the generic version of Diovan, Nexium and Valcyte continue to await approval from the US. While timely approval for these products may bring back lost glory for Ranbaxy, the company has so far disappointed its stakeholders.