Ranbaxy might lose Nexium exclusivity

Ranbaxy might lose a key six-month exclusivity period for the generic version of Nexium - a blockbuster drug from AstraZeneca - if it fails to get regulatory clearance for the US market by the end of November. The drug maker is awaiting approval for the drug, which treats heartburn, from the US Food and Drug Administration (US FDA).

The exclusivity period could imply an opportunity worth $170-$180 million for Ranbaxy, analysts said. The ban on selling drugs manufactured at the Punjab and Himachal units of Ranbaxy has resulted in the regulatory delay, experts added. The company, which is in the process of being acquired by Sun Pharma, is preparing to make the generic version of Nexium from its plant at New Jersey in the US.

REGULATOR TROUBLE

• The exclusivity period could imply an opportunity worth around $170-$180 million
• According to estimates, Nexium is the second-largest selling drug for Astrazenca Plc
• Key reason for delay in USFDA nod is prohibition on selling drugs manufactured at Punjab and Himachal units of Ranbaxy
• The company is now trying to make the generic version of Nexuim from its US plant in New Jersey

Dr Reddy's, Sun Pharma and Aurobindo Pharma have also filed abbreviated new drug applications to market the generic version of Nexium in the US market.

Ranbaxy declined to comment on the matter.

In order to make cheaper drugs affordable, the US government promotes companies to come up with generic version of drugs once their patent expires. "Even after price hike of the generic drugs, it would be cheaper than the branded ones," said an industry official. Following a patent litigation, AstraZeneca and Ranbaxy had agreed for settlement of the generic launch of the drug in 2008. According to estimates, Nexium was the second-biggest selling drug for AstraZeneca.

"At present, the larger issue over Ranbaxy is the case of its merger with Sun, but the delay over Nexium obviously is not good news. It is quite a big opportunity in the US market for that drug," said Sarabjit Kaur Nangra of Angel Broking.

The speculation over the delay of launch of the low-cost Nexium generic started in January when the FDA banned the Toansa unit in Punjab. Earlier, the FDA had banned the company's manufacturing units in Himachal Pradesh, Madhya Pradesh and Mohali in Punjab.

Ranbaxy has been going through a rough patch for quite some time now. The company recently agreed to settle a litigation case regarding its participation in Texas Medicaid, the US federal-state health care programme focused towards people with low incomes. The settlement deal is worth about $40 million. In May 2013, the company had paid a hefty penalty of $500 million to the US Department of Justice after it pleaded guilty to felony charges related to drug safety and misrepresenting data to gain faster approvals. This comprised $150 million for a criminal charge and forfeiture and $350 million in payments for civil claims.

Of late, Indian drug makers have been facing stringent enforcement in the US, the world's largest pharmaceutical market. Several manufacturing plants of leading domestic companies, apart from Ranbaxy, including Sun Pharma, Wockhardt and Strides Arcolab have come under the US FDA's scanner for compliance-related issues. The frequency of regulatory inspections in Indian plants has also increased significantly over the past few years.