* Agency bans Mohali plant from shipping drugs to the U.S.
* Brokerages issue downgrades, worry about new launch delays
(Adds comments from FDA)
MUMBAI, Sept 16 (Reuters) - A third Ranbaxy Laboratories Ltd
plant in India has been hit by a U.S. 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.
With the latest FDA action, all three Ranbaxy plants in
India that are dedicated to the U.S. market, which accounts for
more than 40 percent of its sales, have now been barred from
shipping to the United States, a company source told Reuters.
The ruling triggered the worst single-day fall in Ranbaxy's
stock, wiping off a third of its market value or $1 billion on
Monday, and brokerage downgrades on worries of prolonged delays
to high-yielding product launches in the United States.
The U.S. Food and Drug Administration imposed an 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 said it has evaluated the drug products that are
manufactured at the Mohali facility and determined that it is
unlikely the action will cause drug shortages in the U.S.
"None of the products manufactured at the Ranbaxy Mohali
facility are in short supply," Erica Jefferson, a spokeswoman
for the agency, said.
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 United States. The company
has a total of eight plant locations across India.
The FDA said it inspected Ranbaxy's Mohali facility in
September and December 2012 and identified "significant" quality
control violations, including a failure to adequately
investigate manufacturing problems and failure to establish
adequate procedures to ensure manufacturing quality.
Under the decree, Ranbaxy is prohibited from making
FDA-regulated drugs at the Mohali facility and introducing them
into the United States until its methods, facilities and
controls are in compliance with good manufacturing standards.
The company is required to hire a third-party expert to
inspect the facility and certify to the FDA that the company is
once again in compliance.
Ranbaxy will now have to rely on its wholly owned unit in
the United States, Ohm Laboratories Inc, to supply medicine to
the world's largest economy, said the source, who declined to be
named due to the sensitivity of the issue.
Ranbaxy, in which Japan's Daiichi Sankyo Co owns a
63.5 percent stake, said it had not received any communication
from the FDA on the import ban on 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.
A spokesman at the FDA's Washington headquarters said the
agency has been in touch with the company.
India is the biggest overseas source of drugs for the United
States and is home to more than 150 FDA-approved plants,
including facilities run by global players. Pharmaceutical
exports from India to the United States rose nearly 32 percent
last year to $4.23 billion.
The ban on its Mohali factory comes after the company
pleaded guilty in May to U.S. felony charges related to drug
safety and agreed to a record $500 million in fines. After
falling more than 40 percent in the months afterwards, the share
price had started to inch back up..
But its shares plummeted again on Monday, sinking as much as
32.6 percent. The stock ended down 30.3 percent at 318.50 rupees
in the main Mumbai market that fell 0.2 percent. It has
lost more than half its value from its highest level in 2008.
"It is a big risk for them in the long term. Ranbaxy was
moving up on hopes of launches from this facility but those
expectations are dashed now," said Aneesh Srivastava, chief
investment officer at IDBI Federal Life Insurance.
Brokerages including HSBC, Edelweiss and India's Anand Rathi
Research downgraded Ranbaxy, saying regulatory issues would
continue to hurt the company's turnaround plans.
HSBC said Ranbaxy had started shipping generic Lipitor, the
widely used cholesterol-lowering medicine, from its Mohali plant
in April last year but six months later it recalled some of the
batches due to the potential presence of glass particles.
After that Ranbaxy had to stop exporting Lipitor from its
Mohali plant, the brokerage said.
"Given there are no sales from Mohali, the import alert has
no financial impact ... However, hopes for approvals for new
products from Mohali have been dashed. We understand Ranbaxy had
been working with the USFDA on approval of Diovan from Mohali."
The company has been awaiting the U.S. drug regulator's
final nod for its generic versions of Novartis AG's
hypertension drug Diovan.
The FDA action may delay the launch of other new products by
Ranbaxy including a generic version of Roche's
anti-viral Valcyte and AstraZeneca Plc's blockbuster
heartburn and ulcer pill Nexium in the United States, analysts
WARNING LETTER FOR STRIDES ARCOLAB
India's drugmakers have come under closer scrutiny this year
as the FDA, the guardian of the world's most important
pharmaceuticals market, has increased its presence in the
country, reflecting India's growing importance as a supplier to
the United States.
India produces nearly 40 percent of generic drugs and
over-the-counter products and 10 percent of finished dosages
used in the United States. In March, India allowed the FDA to
add seven inspectors, which will bring its staff in India to 19,
a move that should ultimately bolster the quality of, and
confidence in, Indian-made drugs
The FDA's stepped-up presence should also accelerate what
some in the domestic industry hope is a more rigorous attitude
towards compliance in a country whose cheap generics have made
it the low-cost pharmacy to the world.
Another Indian drugmaker, Strides Arcolab Ltd,
said on Monday a plant of its unit Agila Specialties Private
Limited had also received a warning letter from the FDA after an
inspection in June.
Mylan Inc in February agreed to buy Agila for $1.6
billion to expand its presence in the fast-growing injectable
drugs market, and it was not immediately clear if the FDA action
would have any bearing on the deal.
Strides said it was working with the FDA to resolve concerns
cited in the warning letter in the "shortest possible time".
Company officials were not available to comment on the impact on
the Mylan deal.
(Additional by Toni Clarke in Washington; Editing by Jeremy
Laurence and Phil Berlowitz)