USFDA bans Ranbaxy's Toansa API plant, finds mfg violations

Toansa is the fourth unit of the company that is banned and added to consent decree. With this, all of the company's India-based plants supplying to US are banned.

The US drug regulator said, "The decree contains, among other things, provisions to ensure compliance with current good manufacturing practice (CGMP) requirements at Ranbaxy facilities in Paonta Sahib and Dewas, India, as well as provisions to address data integrity issues at those facilities. In September 2013, the FDA added Ranbaxy’s Mohali facility to the CGMP provisions of the decree.

USFDA has also found major cGMP violations in Toansa inspection. The regulator inspected this plant on January 11, 2014.

"These (violations) included Toansa staff retesting raw materials, intermediate drug products, and finished API after those items failed analytical testing and specifications, in order to produce acceptable findings, and subsequently not reporting or investigating these failures," USFDA stated.

After the ban, the company cannot sell drugs manufactured in Toansa unit in the US and cannot export API for any purpose.

Ranbaxy also can't provide API from Toansa to other companies’ making products for US.

Under the decree, the FDA said it has issued an order prohibiting Ranbaxy from distributing in the United States drugs manufactured using API from Toansa, including drugs made by Ranbaxy’s Ohm Laboratories facility in New Jersey.

Its Ohm Laboratories, the only plant which has USFDA approval, manufactures drugs using API from Toansa.

Prabhudas Lilladher feels this ban on Toansa unit is a huge negative for Ranbaxy and expects Ranbaxy to report negative EBITDA.

"Toansa unit accounted for 70 percent API for company's US business. So the prospect is bleak for the company in near to mid-term," the brokerage house said.

Prabhudas said it will buy Ranbaxy in Rs 200-250/sh range in long-term while Espirito Santo Securities said it will continue to avoid Ranbaxy until clarity emerges.