Ranbaxy's Mohali facility gets US FDA import alert

Third facility after Paonta Sahib and Dewas to come under US FDA scanner

After Paonta Sahib and Dewas, Ranbaxy’s third and newly commissioned Mohali manufacturing facility in India has also been barred from importing drugs to the world’s largest pharmaceutical market – the US.

According to the US Food and Drug Administration (FDA), the ‘import alert’ was issued on September 13 to the Mohali facility of Ranbaxy.

However, Ranbaxy maintains that they have not received any communication related to Mohali import alert from the US FDA.

“We have so far not received any communication from the US FDA on this subject. We are seeking information from the US FDA in this regard, ” a Ranbaxy spokesperson said in an e-mail response.

So far, shares of Ranbaxy Laboratories Ltd dropped 35 percent on the Bombay Stock Exchange, to hit a low of Rs 297.25, as compared to Friday’s close of Rs 457.25. At 1155 IST, shares of the company were trading at Rs 332.35, down 27.3% from its previous close, in an otherwise firm market.

Brokerage HSBC in a research note on Monday downgraded Ranbaxy to "underweight" from "overweight", citing the import alert.

Analysts suggest the import alert is significantly negative for the already ailing company because its management had recently informed its investors that it has made a total of 30 fillings from its facilities in Mohali and US-based Ohm Laboratories. “These fillings are expected to include key drugs such Diovan and Valcyte,” one of the analysts said.

Pending applications to the US FDA from Ranbaxy’s Mohali facility also face a huge threat from the import alert. However, there is a possibility that the company, anticipating the import alert, might have shifted key applications such as Diovan to its Ohm facility.

Business Standard reported in June that Ranbaxy, owned by Japanese drug major Daiichi Sankyo, had received an FDA Form 483 for its Mohali facility, notifying objectionable conditions which might be in violation of the US FDA’s norms, at the conclusion of an inspection in December last year.

According to sources, US FDA inspectors had visited the plant in the process of giving approval to Ranbaxy’s application for valsartan, the generic version of Novartis’ Diovan. However, the inspectors observed lapses and violations of manufacturing norms in the plant and hence, issued Form 483 highlighting the problems.

In May this year, Ranbaxy pleaded guilty in the US of making fraudulent statements to the FDA for gaining approvals for its products. It also agreed to pay $500 million to the US Department of Justice (DoJ) as penalty. The company is already undergoing a consent decree with the US FDA and DoJ to take corrective measures at its facilities in Paonta Sahib and Dewas in India.

According to an analyst, the import alert to Ranbaxy’s Mohali unit assumes significance primarily because this is the company’s third unit in India coming under the scanner.

“The facility formed a very crucial part of Ranbaxy’s overall strategy,” he said.

With Ranbaxy’s key facilities in Paonta Sahib and Dewas blocked for the US market, the company was already facing capacity constraint at its US’s Ohm Labs. The company planned to move key products from Ohm to Mohali, when it received approval in late 2011.

However, all those plans might now get stalled if Ranbaxy fails to take corrective measures at its earliest. It might also impact approvals of other products filed from the facility.