Ranitidine recall forces GSK to alter Indian market strategy

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

GlaxoSmithKline Pharmaceuticals (GSK) recall of popular Ranitidine brand Zinetac from the Indian market has not just hit sales, but also forced the company to review its India strategy, including potential sale of its upcoming factory in Vemgal, Karnataka.

For the quarter ended December 31, 2019, GSK took an impairment of Rs 640 crore on its yet to be commissioned plant in Karnataka, where the company has already invested Rs 1,100 crore.

The plant was slated to be GSK's first greenfield pharmaceutical site in the the last 10 years.

GSK said that they had expected 60 percent of capacity to be occupied by the recalled Zinetac at Vemgal plant when it is on full stream. GSK's original plan was to shift the production of high volume products from its Nashik plant struggling with capacity constraints and other contract manufacturers to Vemgal in order to have control over supply chain and get better margins on the product.

Zinetac was one of GSK's core legacy brands that contributed about 7 percent of company's Rs 3,129 crore in FY19. The brand was high volume product growing at 3 percent before recall.

GSK stock had lost around one-fifth of their market value in last six trading sessions on BSE following the announcement of Q3 results on February 3.  Shares of GSK on February 10 declined 3.82 percent to end at Rs 1,301.25

Ranitidine recall

GSK had initiated global voluntary recall of Ranitidine in September 2019, following reports of a probable cancer causing impurity called N‐nitrosodimethylamine (NDMA).

GSK decided to pull the product from the shelves globally until it completes investigations into the potential source of the NDMA, and is fully confident about the safety of the product.

But the NDMA impurity and subsequent withdrawal of the product has come as a complete bolt from the blue.

The Indian market for Rantidine stood at around Rs 700 crore. The three brands GSK’s Zinetac, Aciloc of Cadila Pharmaceuticals and Rantac of JB Chemicals and Pharmaceuticals cornered 98 percent of the market share.

While GSK has pulled out, Cadila and JB Chemicals and Pharmaceuticals continue to sell their Ranitidine brands in the Indian market.

One executive of JB Chemicals and Pharmaceuticals told Moneycontrol that they have inspected their product for any impurities and submitted data to the drug regulator.

The executive said their product is safe and impurities are well below the permissible limits.

The Indian drug regulatory has, however, not given any directive for companies to recall products.

GSK spokesperson said he is aware about others selling Ranitidine products in India but said the recall was a global decision.

"The announcement was quite unexpected as we had built in Vemgal delta in our future earnings," said Centrum in its latest report.

"However, with hindsight we believe the impairment not realised at present could have created further financial burden on the stock going ahead. We have revised our earnings for Zinetac recall and margin delta from Vemgal, translating into earnings revision of 25% in FY21E and have introduced our FY22E," the report added.

GSK is now banking on its new launches Nucala and Meneveo to drive
future growth in India.