Home » News » CNBC-TV18 Comments
Sep 17, 2013, 11.01 PM IST | Source: CNBC-TV18

Ranbaxy in a spot; investors losing faith?

At a time when Ranbaxy has been facing severe regulatory issues from the US Food and Drug Authority (USFDA), it also has lost a subsequent share of its market cap. It has raised questions whether investors have started to lose faith in the pharma major.

In times of trouble, assurances have constantly been seen from Ranbaxy . The drug firm, which is going through severe regulatory issues with the USFDA, has consequently lost a significant share of its market cap over the last few months. In many ways, it has failed to keep its investors in confidence, which raises the question of a trust deficit in Ranbaxy, reports CNBC-TV18’s Archana Shukla.

In June 2013, the company’s MD had spoken on a probe for the Mohali plant
 
“No. We continue to, even in 2013, make our regulatory filings from Mohali”, said Arun Sawhney, MD, Ranbaxy.

Also read: USFDA adds Ranbaxy's Mohali plant to consent decree

This was just four months ago when Ranbaxy management denied any regulatory troubles at its plant in Mohali. And this was not the only occasion. Repeated questions by investors, analysts and media were evaded by the company, with assurances that the Mohali plant would be the game changer.

Even in May 2013, Sawhney had given its assurance on its Mohali plant.

“As and when the (drug) approvals come, of course. In the coming year, it should see major supplies going from this (Mohali) facility”, Sawhney adds. 

But, this never happened. Even after December 2012 when Ranbaxy recalled batches of Mohali's only product Atorvastatin from the US market on issues of product contamination, the company called it a business strategy.

Even in the recent event of USFDA’s import ban on Mohali, the company remained in denial. A subsequent USFDA statement established that lapses were noted during September and December 2012 audits and continued still.

Analysts now question the credibility of the company's management, who seem to have been misleading investors by saying that USFDA inspections would not disrupt the US business.

UBS Securities says, “Ranbaxy's communication has been contrary to what has been happening in the company”

Finally accepting the issues, Ranbaxy in a statement today said that "it believes it has made further improvements at its Mohali facility since the last inspection in 2012. It is hopeful of an early resolution of these concerns."

But with a unconvincing past, investors are wary of believing these statements and are questioning; is the parent Daiichi Sankyo even attempting to have a more transparent dialogue with its Indian investors?

Set email alert for

ADS BY GOOGLE

Buy & sell politicians on Power Play
- the political stock exchange

Price Update

Rahul Gandhi

570.54 7.41 1.32%

340799

Bought today

361318

Sold today

0.81%

User holding

video of the day

Add cyclicals, banks on positive poll outcome: UBS

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.