Daiichi firm on Ranbaxy buyout despite US FDA action

The US FDA has claimed that Ranbaxy has used APIs (active pharmaceutical ingredient) from unapproved sources. It has raised issues on potency and adulteration of medicines. The US FDA has asked court to force Ranbaxy for internal review of manufacturing operations in India. It has been investigating Ranbaxy for the past three years. The Ponta Sahib plant has been suspended for US supplies since 2006.

The US FDA charges are a big negative for Ranbaxy. Almost 25% of Ranbaxy's revenues come from its US operations. If the case goes against Ranbaxy, it may be slapped with a high penalty. The supply from the Indian units may be suspended.

Ranbaxy will file its response today. The company said that their US business continues to be normal. The Daiichi Sankyo deal is binding, final and on track, it clarified.

Ranbaxy has said that no prosecution has been initiated. An investigation has been underway for approximately three years. Despite this no charges have been filed.  During this period, Ranbaxy has been cooperating fully with the US Justice Dept.  The FDA has also gathered over 200 random samples of various products marketed by the company in the US. These products have been independently tested by the US FDA and were found to be complying with all the specifications as per the filing. Under these circumstances the company finds that the allegations are baseless.

Ranbaxy said, “A motion has been filed (not granted) seeking certain documents. No legal proceedings in the sense of a prosecution have been started. Ranbaxy strongly denies the allegations contained in the motion. Meanwhile, we continue to co-operate with the US Justice Department. We remain committed to providing high quality generic medicines at affordable prices to our customers and patients in the US.”

From 2006, the US FDA had blocked all Abbreviated New Drug Application, or ANDA, filings from Ponta Sahib, the plant that has come under this particular investigation. Ranbaxy had re-rooted all it's ANDA filings from some other plants like OM Labs and its Madhya Pradesh plant in Dewas. ANDAs are not being filed anymore from that particular plant. So, we cannot expect any kind of fallout of that particular move.

With respect to other ANDAs that are already there, i.e. products that are already introduced in that market, it is not known how US FDA will want to react to it. Only one precedent had happened way back in 2005, where Able Labs really went belly up. They had to close down their operations because there was massive forgery and fudging of information that was submitted to US FDA.

If this particular case does go against Ranbaxy and in favour of the US FDA, the implications can be really grave. It might also include banning the entire exports for Ranbaxy as far as the US is concerned.