Mumbai: Shares of India’s largest drug maker Ranbaxy Laboratories Ltd fell the most among blue-chip stocks on the Bombay Stock Exchange on Friday as investors fretted about the cost of a proposed settlement with the US Food and Drug Administration (FDA) relating to alleged regulatory breaches by its manufacturing plants.

Ranbaxy shares dropped 6.62%—their biggest single-day fall since 21 March—to Rs 443.75 on a day the benchmark Sensex gained 0.88% to 17,228.3 points.

The court documents don’t identify the affected medicines although they probably include a version of Takeda Pharmaceutical Co. Ltd’s Actos diabetes pill, said Priti Arora, a pharmaceuticals analyst at Kotak Securities Ltd in Mumbai.

“Losing 180-day exclusivity is very bad,” Arora said on Thursday. Selling generic Actos in the US with limited competition may have generated more than $200 million in revenue for Ranbaxy, she said.

The drug, which had global sales of $4.7 billion in 2010, faces generic competition in August.

The consent decree will also require Ranbaxy to appoint an external consultant to conduct a detailed internal review at its banned manufacturing plants in India and to withdraw any drug approval applications that were found to contain false data.

“The detailed process, particularly product-by-product validation of data integrity, implies that complete resolution can take two-three years,” brokerage Nomura analysts Saion Mukherjee and Aditya Khemka said in a report on Thursday. “As Ranbaxy works towards compliance with the help of external agencies, it will continue to incur high costs for resolution,” it added.

The FDA had in September 2008 banned two Ranbaxy manufacturing plants in India—in Paonta Sahib and Dewas—from exporting products to the US market on charges of non-compliance with regulatory standards and falsification of data.

Three months after Japan’s Daiichi Sankyo Co. Ltd bought a controlling stake in the Indian drug maker, Ranbaxy had to stop exports of some 30 large-selling generic drugs to the US market following the ban. After three years’ struggle, Ranbaxy announced it had signed a consent decree with the FDA on 20 December to resolve the issue. This required approval from the US federal court upon the filing of the decree by the DoJ.

After the December commitment to the FDA on resolving the issue, Ranbaxy had set aside $500 million to resolve all potential civil and criminal liability related to the three-year-old dispute with the DoJ and the FDA. Following this, parent company Daiichi Sankyo had to substantially cut its revenue guidance for the year 2012.

“We had expected the filing of this consent decree to show a way out of Ranbaxy’s difficulties and reopen its exports to the US, but the decree’s actual terms are more severe than we anticipated,” Credit Suisse AG’s Tokyo-based healthcare analysts Fumiyoshi Sakai and Toshiyuki Tateno wrote in a report.

Daiichi Sankyo shares closed down 2.3% on the Tokyo Stock Exchange to 1,422 yen, the lowest since 2 December.

One of the three generic drug applications affected may include a version of Nexium, a heartburn treatment sold by AstraZeneca Plc that had global sales of $5 billion in 2010, according to Credit Suisse. Five other generic drug applications are at risk if Ranbaxy doesn’t implement certain changes by a specified date, Mumbai-based analyst Anubhav Aggarwal said.

Ranbaxy has 66 generic drug applications awaiting approval with the FDA. For 13 of these, the company was the first to challenge patents, according to a presentation on its website.

“Under the terms of the consent decree, which is subject to approval by this court, Ranbaxy has committed to further strengthen procedures and policies to ensure data integrity and to comply with current good manufacturing practices,” said a statement by Ranbaxy on Thursday.

“Today’s announcement is the next step in the process of finalizing our agreement with the FDA to resolve this legacy issue,” said Arun Sawhney, Ranbaxy chief executive officer and managing director.

ch.unni@livemint.com