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Jun 26, 2013, 04.52 PM IST | Source: CNBC-TV18

'Adulteration' defined differently in US and India: Ranbaxy

Arun Sawhney, managing director and chief executive officer, Ranbaxy continues to deny any wrong doing. He says the USFDA's ban on its products is due to different definitions of what is 'adulterated' in the US and in India.

The Indian pharma sector has in the recent past faced a slew of allegations and pessimism . Ranbaxy , one of India's pharma majors, has been the harbinger of this negativity. The company has faced and eight year long civil and criminal probe in the United States, four year long import ban on its manufacturing facilities in India for supplies to the US, admissions to felony charges, a USD 500 million settlement fine and a very strict consent decree.

Speaking to CNBC-TV18's Archana Shukla, Arun Sawhney, managing director and chief executive officer of Ranbaxy says the company has taken all measures to make sure that an epsiode like this does not recur in the future. He says the USFDA's ban on its products is due to different definitions of what is 'adulterated' in the US and in India. 

"The drugs that were put on the market in the US at that time based on delayed testing of stability samples data were described as adulterated. Does that make that drug in the US substandard or contaminated or spurious? The clear answer is no. The definition of the world adulterated in the US context is very different from the definition of a drug as adulterated in the Indian context," adds Sawhney in an interview to CNBC-TV18.

Below is edited transcript of Sawhney's interview to CNBC-TV18. 

Q: Are the troubles over for Ranbaxy here? We understand there is fresh probe that has been ordered by the Drug Controller General of India in the manufacturing facilities for Ranbaxy. What are the sort of dialogues are you having with the drug controller now?

A: I recognise that there were issues in the past. I can assure you that Ranbaxy Laboratories has taken all measures to make sure that they do not recur again the future. We have invested more than USD 300 million since 2009 in upgrading our facilities, making sure that there are good systems and procedures in place, training people, hiring the best consultants in the world to build skill sets at Ranbaxy. I am not aware of any probe being ordered by local authorities on Ranbaxy.

Q: But we understand they are in constant dialogue with the company and they have an initiated a probe.

A: I have regular meetings with all the stakeholders including the government. We are cooperating with them. We provide all information that is requested of us. We will be happy to provide all information that any government agency is seeking from us.

Q: If we go back to the settlement that you have signed with US Food and Drugs Administration (USFDA), you have agreed that you issued adulterated drugs between 2005 and 2006 in the US. You have agreed that one of these drugs Sotret had failed accelerated dissolution stability test but you continued selling it for another 13 months. You have accepted that Gabapentin in 2007 certain batches for testing out a specifications had unknown impurities and would not maintain shelf life. These were also some of the drugs that were sold in India that point in time. How would Ranbaxy claim and with what certainty that the drugs that were sold in India were not adulterated and substandard as you have accepted in the US?

A: A pharmaceutical company is expected to operate under CGMP conditions. CGMP stands for Current Good Manufacturing Practices. In Ranbaxy’s context, the delayed testing of stability data was a non-GMP activity. So, the data that was generated out of delayed stability testing was a non-GMP data. The drugs that were put on the market in the US at that time based on delayed testing of stability samples data were described as adulterated. Does that make that drug in the US substandard or contaminated or spurious? The clear answer is no. The definition of the world adulterated in the US context is very different from the definition of a drug as adulterated in the Indian context.

Q: In the press release of Department of Justice (DoJ) they have said that when company sell adulterated drug, they undermine the integrity of FDA’s approval process and may cause patients to take drugs that are substandard, ineffective or unsafe?

A: In Ranbaxy context the adulteration was because of the data that was generated on delayed testing of stability samples. That was the context relevant to Ranbaxy.

Q: You have accepted that you were selling drugs which had failed stability testing, which were testing out of specification had unknown impurities, doesn’t that lead two drugs which would eventually may not be harmful or unsafe but maybe ineffective?

A: We have on record FDA advising the patients in the US to continue taking Ranbaxy drugs because they discovered Ranbaxy drugs were of good quality. So, there was nothing wrong with the quality of drugs in the US. The expression adulterated has a definite meaning in the US context which is not the same as in India or anywhere else in the world.

Q: In 2008 press release FDA had mentioned that while this does not involve removing products from the market, FDA has no evidence to date, that Ranbaxy has shipped defective products. So, at that point in time, to date they did not have enough evidence and in 2013 when you signed the settlement, in that meantime they had come across all the issues that have been highlighted in the current press release?

A: Yes, it is the delayed testing on the stability samples and delayed information that was provided to FDA. That was it. Since 2008, we have not shipped any product from Dewas or Paonta to the US.

In 2008 FDA has gone on record telling that Ranbaxy drugs are safe, there is no issue with the quality of the drugs. We have taken all measures since then to ensure that the issues that we were facing way back in 2004-05 are not faced again.

Q: There has been a case of outright fraud by the company at that point in time which you have agreed in your statements to the USFDA and the DoJ. That is the story for the US. The same plants were supplying those drugs in India and continue to supply drugs in India, how do you convince the consumers here in India? You have a Public Interest Litigation (PIL) filed against Ranbaxy. You have hospitals which are taking independent action advising their doctors to take caution before they advice Ranbaxy drugs?

A: We have signed consent decree with FDA. We have settled with US DoJ. In case of FDA we will go through the consent decree process and once we go through the consent decree process we will be back in business from Dewas and Paonta in the future.

In case of DoJ we provided in 2011 and took a big knock in 2011. 2012 we performed ahead of expectations. In 2013 we are performing as per our target and we remain firm on our guidance of Rs 120 billion in 2013.

We have very aggressive growth plans for Ranbaxy also in the US. In India, we have key markets, key therapeutic areas. We have continued to make investments in our manufacturing. We have very exciting portfolio in R&D and above all I also have a team that will execute on all these plants. So, this is the implication of the DoJ and FDA.

Now, coming to the point on hospitals, by and large in India all hospitals are prescribing Ranbaxy drugs. I respect internal processes of all the hospitals. I will provide continuously information that they seek to build confidence in Ranbaxy drugs and Ranbaxy medicines and I am sure that they will continue to prescribe Ranbaxy medicines as they have been doing up till now.

Ranbaxy Labs stock price

On September 16, 2014, Ranbaxy Laboratories closed at Rs 599.10, down Rs 2, or 0.33 percent. The 52-week high of the share was Rs 667.30 and the 52-week low was Rs 297.25.


The company's trailing 12-month (TTM) EPS was at Rs 9.78 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 61.26. The latest book value of the company is Rs 25.87 per share. At current value, the price-to-book value of the company is 23.16.

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