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Ranbaxy’s shares fall 9.3% on reports of Australian probe

Ranbaxy’s shares fall 9.3% on reports of Australian probe
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First Published: Fri, Mar 06 2009. 01 15 AM IST

Updated: Fri, Mar 06 2009. 11 40 AM IST
New Delhi: Shares of India’s largest drug maker, Ranbaxy Laboratories Ltd, tumbled 9.3% on Thursday to its lowest level in almost eight years as reports that the Australian drug regulator had begun an investigation into its plant in Paonta Sahib, Himachal Pra4desh, caused investor sentiment on the stock to worsen.
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Ranbaxy shares fell to Rs144.40 at the close of trading on the Bombay Stock Exchange as investors pulled out of the stock that has had no respite since the US Food and Drug Administration (FDA) on 25 February took regulatory action against the Paonta Sahib plant.
“There is a sentimental impact on the stock,” said Abhishek Singhal, an analyst at Macquarie Research in Mumbai, who has an underperform rating on the stock. “Australia’s contribution to Ranbaxy’s sales isn’t huge, much less is the contribution of the single Paonta Sahib plant.”
According to Ranjit Kapadia, head of research for the private clients group at brokerage Prabhudas Lilladher Pvt. Ltd, Australia contributes only 1.5%-2% of Ranbaxy’s revenue.
Australia’s Sydney Morning Herald reported on Wednesday that the Therapeutic Goods Administration (TGA) was investigating 62 drug products registered for sale in Australia and manufactured at the Paonta Sahib plant of the company, controlled by Daiichi Sankyo Co. of Japan. Ranbaxy declined to comment on the report.
“At this time, there is no evidence that the quality of any of the product manufactured by Ranbaxy and supplied to the Australian market is affected,” TGA said in an emailed statement to Bloomberg.
The USFDA said on 25 February that Ranbaxy won’t be allowed to introduce new generic drugs from the Paonta Sahib plant because it falsified data about products’ shelf life. The agency said it had not identified any health risks linked to the estimated 25 generic drugs already approved using data from the plant.
FDA invoked its Application Integrity Policy against the Paonta Sahib facility, stopping all substantive scientific review of any new or pending drug approval applications that contain data generated by the facility.
The Canadian regulator, Health Canada, on 26 February also said it had asked Ranbaxy Canada to quarantine all drugs entering Canada from the Paonta Sahib plant.
Graphics by Paras Jain / Mint
Bloomberg’s Saikat Chatterjee contributed to this story.
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First Published: Fri, Mar 06 2009. 01 15 AM IST