FDA raises red flag on a fifth Ranbaxy facility

Tags: News
The US Food and Drug Administration (FDA) has raised concerns about the manufacturing practices at a Ranbaxy factory in Punjab. The company’s shares got a beating following the news.

In a filing on the Bombay Stock Exchange on Monday, the company said, “On January 11, Ranbaxy received Form 483 with certain observations as a result of the recent FDA inspection at its active pharmaceutical ingredient plant at Toansa, Punjab. The company is assessing the observations and will respond to the FDA… to resolve the concerns at the earliest.”

FAA issues Form 483 to a company at the conclusion of inspection in which the investigators observe conditions that they think violate of the Food Drug and Cosmetic Act and related Acts. Form 483 notifies the company of objectionable conditions.

At the conclusion of inspection, Form 483 is presented and discussed with the company’s senior management. The company is encouraged to respond with a corrective action plan followed by it implementation. Else, an import alert could be issued against the company.

On Monday, Ranbaxy shares closed at Rs 438.35, down 5.42 per cent from the previous close. The stock touched an intra-day high of Rs 466 and intra-day low of Rs 420. The scrip had fallen below Rs 420 on December 16 when it had touched Rs 418.

Four of Ranbaxy’s key formulation plants – in Mohali, Paonta Sahib, Dewas and Batamandi – are already under the US scanner and are banned by FDA from exporting medicines to the US.

The US regulator had found violations of ‘good manufacturing practices.’ The Mohali factory received an import alert last September for not meeting good manufacturing practices. The ban came after Ranbaxy was accused of fraudulent activities and paid $500 million in fine.

Failure to address the concerns raised by FDA about Toansa will result in FDA banning all exports to the US from the factory.

Sarabjit Kour Nangra, vice-president for research, pharma, Angel Broking, said, “The Ranbaxy plant is said to manufacture around 70-75 per cent of its API requirements. With the company’s Paonta Sahib, Dewas and Mohali plants already under import alert, and now Toansa under scanner, there will be an impact on its operations in the US, unless it can compensate for the same at the earliest and mange a smooth supply of key raw material.”

According to another Mumbai-based pharma analyst, 70 per cent of the API requirement of Ranbaxy’s Ohm plant in the US is met by this plant. “Besides, for all niche opportunities that the company filed for are met by this facility. So, with the increase in threat the growth of the company will be affected. There will also be delays in the launch of niche products in the US. After the case where Ranbaxy paid a fine FDA is more careful and will be far more stringent,” the analyst said.

Ranbaxy is awaiting approvals for key products in the US, including generic versions of Diovan, a hypertension drug of Novartis. It is also awaiting approval to launch a generic version of Roche’s anti-viral Valcyte and AstraZeneca’s Nexium, a heartburn and ulcer pill. Ranbaxy has pinned much hope on their timely launches.

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