Mumbai: Shares in Ranbaxy Laboratories Ltd fell more than 3% on Wednesday after the Indian drugmaker said it had reached an agreement with the United States (US) Food and Drug Administration (FDA) to comply with US manufacturing practices.
The deal, which needs a court approval, potentially will allow the company to boost generic sales in the US market.
Ranbaxy, whose shares initially rose 2% on the announcement, said it would make a $500 million provision to resolve potential criminal and civil liabilities arising from an investigation by the US Department of Justice.
“This is an incremental negative as the penalty is on the higher end of our expected range of $200 million to $500 million,” Nomura said in a note.
The FDA accused Ranbaxy in 2009 of falsifying data and test results in drug applications, and it halted reviews of drugs made at the company’s plant in northern India.
The FDA banned the import of Ranbaxy’s various generic formulations in 2008, citing compliance issues.
Angel Broking said in a note that while it was unclear whether the deal represented a full and final settlement with the FDA, “it is a positive development towards a resolution.”
Ranbaxy, majority owned by Japan’s Daiichi Sankyo Co, said it had committed to further strengthen its procedures and policies to ensure data integrity and to comply with good manufacturing practices.
Separately, Ranbaxy said on Wednesday it would market Daiichi’s products in Malaysia by launching of anti-bacterial drug Cravit in January.
Daiichi Sankyo, Japan’s number three drugmaker, cut its annual net profit forecast by almost half as a result of the settlement.
Other Indian companies including Aurobindo Pharma Sun Pharmaceutical Industries and Cadila Healthcare have been struggling to get FDA approval for one plant each over compliance issues.
In the morning trade, Ranbaxy shares were down 3.2% at Rs 382 in a Mumbai market that was up 1.65%.
Daiichi cuts profit outlook, Ranbaxy settles with US authorities
Tokyo: Japan’s number three drugmaker Daiichi Sankyo Co cut its annual net profit forecast by almost half on Wednesday after its Indian unit Ranbaxy Laboratories said it will make a $500 million provision to end a long-running compliance dispute with US authorities.
In 2009, the US FDA accused Ranbaxy of falsifying test results and data in drug applications, and halted reviews of products from the firm’s Paonta Sahib plant in northern India.
Ranbaxy said in a statement on Wednesday it has signed an agreement with the FDA and will improve procedures and policies to ensure data integrity and comply with good manufacturing practices.
It also said the $500 million provision in connection with a related investigation by the US Department of Justice would be enough to resolve all potential civil and criminal liability.
Daiichi, which took a 64% stake in Ranbaxy in 2008, revised down its net profit forecast for the year that ends in March 2012 by 48% to ¥26 billion ($335 million).
The company kept its annual forecasts for sales, operating profit and dividends. Shares of Daiichi were up 1% versus a 1.4% climb in the benchmark Nikkei 225.