A third Ranbaxy Laboratories Ltd plant in India has been hit by a US import ban over quality concerns, dealing a blow to the company’s turnaround plans and threatening to hurt new launches and sales of medicines to its largest market.
The ruling triggered the worst single day fall in Ranbaxy’s stock yesterday, wiping off a third of its market value or $1bn, and brokerage downgrades on worries of prolonged delays to high-yielding product launches in the US.
The US Food and Drug Administration slapped a so-called import alert on the Mohali factory in northern India on Friday, saying the plant owned by India’s biggest drugmaker by sales had not met “good manufacturing practices.”
The FDA usually issues such alerts banning shipments to the US after inspectors raise concerns about quality of the medicines produced at facilities.
With the latest FDA action, all three India plants of the company dedicated to the US market, which accounts for more than 40% of its sales, have now been barred from shipping to the US, a company source said.
Ranbaxy will now have to rely on its wholly-owned unit in the US, Ohm Laboratories Inc, to supply medicine to the world’s largest economy, said the source, who declined to be named due to sensitivity of the issue.
Ranbaxy, in which Japan’s Daiichi Sankyo Company owns 63.5% stake, said it had not received any communication from the FDA on the import ban against the Mohali factory.
“We are seeking information from the USFDA in this regard,” the company said in a statement issued to the stock exchanges.
Daiichi Sankyo and the FDA office in New Delhi could not be reached for comment.
India is the biggest overseas source of drugs to the US and is home to over 150 FDA-approved plants including facilities run by global players. Pharmaceutical exports from India to the US rose nearly 32% last year to $4.23bn.
Two of Ranbaxy’s other plants at Dewas and Paonta Sahib were hit with the same import alerts in 2008, and are still barred from making shipments to the US. The company has a total of eight plant locations across India.