Ranbaxy's roller coaster ride on settlement with US FDA

Ranbaxy shares ended 3% up on Wednesday in a roller coaster ride after the drug maker signed a consent decree with US FDA, and set aside USD 500 million to cover any liabilities arising from a US Justice Department probe.

December 21, 2011 / 23:47 IST

Moneycontrol Bureau

Ranbaxy shares ended 3% up on Wednesday in a roller coaster ride after the drug maker signed a consent decree with US FDA, and set aside USD 500 million to cover any liabilities arising from a US Justice Department probe.

In a conference call held on Wednesday, Ranbaxy's MD and CEO Arun Sawhney said the company will not have to raise any further funds for the penalty, as cash on its books coupled with earnings from its generic Lipitor it launched recently would be sufficient to cover the USD 500 million provisions. This surely seems to have calmed jittery investors, who were worried that any more fund raising could strain Ranbaxy's balance sheet.

Ranbaxy's tussle with the US FDA dates back to 2008 when the drug regulator banned Ranbaxy from exporting 30 drugs from its facilities in Dewas, Madhya Pradesh and Paonta Sahib, Himachal Pradesh and also stopped marketing approvals for new ones following quality control and data reporting issues.

"We are pleased to have resolved this legacy issue with the FDA as we begin the next chapter in Ranbaxy's history," Sawhney said.