U.S. pulls approval for Ranbaxy copies of AstraZeneca and Roche drugs

By Zeba Siddiqui

MUMBAI (Reuters) - The U.S. Food and Drug Administration (FDA) has revoked a tentative approval for Ranbaxy Laboratories Ltd to make a cheap copy of AstraZeneca Plc's heartburn drug Nexium, after its Indian plants were banned over quality control issues.

The FDA has also stripped Ranbaxy of tentative approval and six-month exclusivity for a copy of Roche Holding AG's antiviral Valcyte, a fresh blow to the company that has been hit by a raft of regulatory bans over poor production quality.

The U.S. regulator has banned output from all Ranbaxy's India-based plants under a wider scrutiny of the country's $15 billion pharmaceutical industry, which is the largest supplier of generic medicines to the United States.

Ranbaxy was the first company to receive tentative approvals to launch copies of the two drugs as long ago as 2008, making it eligible to exclusively market the medicines for six months - a huge revenue generating opportunity.

The launch of Nexium and Valcyte generics had been awaiting final approval from the FDA. That was delayed as Ranbaxy struggled to resolve quality issues.

Ranbaxy said on Thursday the FDA had informed it that the regulator's original decisions granting tentative approval were "in error because of the compliance status of the facilities".

The FDA also told the drugmaker there were no "data integrity" issues related to the company's filings for the two drugs, Ranbaxy said. The company did not elaborate and a spokesman did not respond to an email seeking comment.

Ranbaxy, which is being acquired by larger rival Sun Pharmaceutical Industries Ltd for $3.2 billion, said it was disappointed with the development and was evaluating options to "preserve its rights."

EXCLUSIVE RIGHTS

Ranbaxy CEO Arun Sawhney had said last month the company had exclusive rights to the launch of Nexium in the United States, despite its India manufacturing plants being banned from exporting to the world's largest pharmaceutical market.

Nexium achieved global sales of $3.87 billion in 2013, $2.12 billion of which came from the United States.

While Ranbaxy did not comment on its sales exclusivity on the launch of a copy of Nexium, analysts in Mumbai said the loss of tentative approval meant the company would have lost that opportunity as well.

"Withdrawal of the tentative approval for Nexium provides enough room for suspicion that Ranbaxy is losing the Nexium exclusivity," said Surya Patra, a pharmaceutical sector analyst with brokerage Phillip Capital.

Analysts had expected generic Nexium to contribute about $150 million to Ranbaxy's sales in the first six months of the exclusive sales period, while Valcyte was expected to contribute between $40 million and $50 million.

Dr Reddy's Laboratories Ltd, Ranbaxy's bigger Indian rival, is among the few other global drugmakers who have sought FDA approval to launch generic copies of Nexium and Valcyte, said analyst Prakash Agarwal at brokerage CIMB.

These companies could hugely benefit from the loss of sales execlusivity of Ranbaxy if their drugs get final FDA approval, Agarwal said.

AstraZeneca on Thursday reported better-than-expected sales and raised its 2014 sales forecast for the second quarter in a row, due to the delayed arrival of generic copies of its Nexium drug in the United States.

AstraZeneca CEO Pascal Soriot said he was "not totally sure" how to read Ranbaxy's announcement on generic Nexium. He told analysts he was still assuming there would be no generic Nexium in the United States this year.

Swiss drugmaker Roche declined to comment. An FDA spokesman did not immediately respond to a Reuters email seeking comment.

(Additional reporting by Ben Hirschler in London and Caroline Copley in Zurich; Editing by Clara Ferreira Marques and David Holmes)