Ranbaxy plunges 20% as US FDA bans imports from its Toansa plant
Moneylife Digital Team 24 January 2014

Ranbaxy Laboratories shares plunged nearly 20% on Friday after US FDA banned drug imports from its Toansa plant in Punjab

Ranbaxy Laboratories (Ranbaxy) shares prices plunged 20% on Friday and hit an intra-day low of Rs334, after confirmation the US Food and Drug Administration (USFDA) banned supplies from Ranbaxy’s Toansa plant in Punjab.

Ranbaxy in its press release said, “US FDA notified the company that, it is prohibited from manufacturing and distributing active pharmaceutical ingredients (APIs) from its facility in Toansa, India, for FDA-regulated drug products.”

Earlier on 11 January 2014, US FDA identified significant current good manufacturing practice (CGMP) violations at Ranbaxy’s Toansa plant. Violations included Toansa staff re-testing raw materials, intermediate drug products, and finished API after those items failed analytical testing and specifications, in order to produce acceptable findings, and subsequently not reporting or investigating these failures.

As a result of this action, Ranbaxy is now prohibited from manufacturing API for FDA-regulated drugs at the Toansa facility and from introducing API from that facility into interstate commerce, including into the United States, until the firm’s methods and controls used to manufacture drugs at the Toansa facility are established, operated and administered in compliance with CGMP.

“This development is clearly unacceptable and an appropriate management action will be taken upon completion of the internal investigation,” said Arun Sawhney, chief executive officer and managing director of Ranbaxy Laboratories.

Ranbaxy said in its press release that, it had voluntarily and proactively suspended shipments of API from this facility to the US market when it received the inspection findings during first week of January 2014. It also stated: “Ranbaxy is disappointed with the recent FDA action and would like to apologise to all its stakeholders for the inconvenience caused by the suspension of shipment.”

Ranbaxy has had a history of procedural violations in its plants. Earlier in May 2013, Ranbaxy the unit of Japanese Daiichi Sankyo, paid $500 million to settle similar charges relate with manufacture and distribution of certain adulterated drugs made at Paonta Sahib and Dewas in India.

Again shortly after, in July 2013, Ranbaxy Laboratories has agreed to pay about $420,000 to settle civil and criminal complaints of selling drugs of inferior strength, purity or quality Idaho state in north-western US.

US FDA in a statement said that, the agency is evaluating potential drug shortage issues that may result from this action. If the FDA determines that a medically necessary drug is in shortage or at risk of shortage, the FDA may modify this order to preserve patient access to drugs manufactured under controls that are sufficient to assure quality, safety and effectiveness.

On Friday, Ranbaxy Laboratories closed 19.54% down at Rs335.65 while 30-share benchmark Sensex closed 240 points down at 21,133.

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