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Clearance for only one Ranbaxy site

Clearance for only one Ranbaxy site
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First Published: Wed, Apr 01 2009. 01 16 AM IST

Not so green? Ranbaxy’s Paonta Sahib facility in Himachal Pradesh.
Not so green? Ranbaxy’s Paonta Sahib facility in Himachal Pradesh.
Updated: Wed, Apr 01 2009. 01 16 AM IST
New Delhi: Information provided by Ranbaxy Laboratories Ltd in filings to the stock exchanges and a press release issued on 23 March has led some analysts and at least one international news agency into assuming that the company’s Paonta Sahib facility, censured by the US Food and Drug Administration (FDA), had been subsequently given the all-clear by the drug regulators of the UK and Australia.
Not so green? Ranbaxy’s Paonta Sahib facility in Himachal Pradesh.
Three analysts told Mint that they thought the Paonta Sahib facility had been “cleared”. And news agency Reuters drew the same inference.
Ranbaxy, however, has two plants in Paonta Sahib and only one of these, at Ganguwala, was inspected by the UK and Australian regulators.
The other one, at Batamandi, wasn’t inspected because neither country sources any drugs from there.
To be sure, this confusion may have been caused by assumptions by the analysts and the media, but the company’s disclosures haven’t helped.
Ranbaxy’s statements to the stock exchanges and the media have used Paonta Sahib, the place in Himachal Pradesh where both facilities are located to refer to both, or to either.
For instance, its 23 March statement said the Paonta Sahib facility had been given Good Manufacturing Practice certificates by the Medicines and Healthcare products Regulatory Agency (MHRA) of the UK and the Therapeutic Goods Administration (TGA) of Australia.
Ranjit Kapadia, head of research (private client group) at Prabhudas Lilladher Pvt. Ltd, a Mumbai brokerage, said: “Batamandi is part of the Paonta Sahib site and so it is covered in the approval.” Sure enough, on 23 March, Ranbaxy’s shares rose 10% on the Bombay Stock Exchange on a day when the exchanges benchmark index rose 4%.
However, MHRA and TGA have confirmed to Mint that their certificates cover only one plant, the one at Ganguwala.
“MHRA and TGA inspected and approved the Paonta Sahib plant as products from the region supply to them. Batamandi does not supply products to Europe and Australia,” said a spokesperson for Ranbaxy.
“Australian regulators...inspected Ranbaxy’s manufacturing facilities in Paonta Sahib and Dewas in September and November 2008 with regulators from Europe, Canada, Singapore and the WHO (World Health Organization). The Paonta Sahib inspection did not cover the Batamandi plant,” said a spokesperson for TGA in an email.
“The Batamandi site does not supply any product to the UK,” said Elizabeth Bolton, assistant press officer, MHRA, in an email.
Their clarification becomes significant because on 16 September, US FDA issued warning letters to Ranbaxy questioning the manufacturing practices at two of its facilities—Paonta Sahib, Himachal Pradesh and Dewas, Madhya Pradesh. The letter issued in regard to Paonta Sahib repeatedly mentions concerns at the company’s “Batamandi (Unit II), in Paonta Sahib, India”.
FDA rap
On 25 February, FDA invoked its application integrity policy (AIP) on the Paonta Sahib facility. This meant that FDA would not review any new or pending applications for drugs filed on data generated by the Paonta Sahib facility.
“The Paonta Sahib and Batamandi plants are considered to be one facility by the FDA. The AIP was invoked for the Paonta Sahib unit, which includes the Batamandi building,” FDA press officer Christopher C. Kelly said in an email sent after the decision of the UK and Australian drug regulators was made public.
Following FDA’s AIP in February, Ranbaxy issued another statement, saying, “All pending and approved ANDAs (abbreviated new drug applications) from Ranbaxy’s Paonta Sahib facility have been added to a list maintained under a policy entitled AIP”, without clarifying that it was referring to both facilities.
In an earlier communication, emailed after FDA invoked AIP, MHRA had said: “Many of the findings that have given rise to the FDA concerns appear to have arisen from the associated Batamandi site. The Batamandi site does not supply products to the UK.”
FDA had in September warned Ranbaxy on issues related to its inspection of the Paonta Sahib facilities.
Lobbying FDA
Meanwhile, Reuters reported on Tuesday that Japanese drug maker Daiichi Sankyo Co. Ltd will meet with US health authorities early next month about the regulatory action against Ranbaxy.
“We have set a meeting with the FDA for early April to clear the concerns the FDA has stated,” Daiichi Sankyo president Takashi Shoda told reporters and analysts at a research and development meeting.
Interestingly, Reuters also said, in the same story, that “European and Australian regulators approved the Ranbaxy plant after a joint audit last October”.
Daiichi Sankyo bought a majority stake in Ranbaxy last year, seeking to diversify its business operations into the generic drug and emerging markets, given intensifying competition and declining growth opportunities in the branded drug market.
“Daiichi Sankyo aims to provide leadership and resolve the issue early,” Shoda said.
An analyst said Ranbaxy’s problems with FDA are far from over.
“We do not think the US FDA’s inspection and clearance process for Ranbaxy’s facilities would be influenced by inspections conducted by other regulatory authorities especially given that the issues in the September 2008 warning letter appear to relate primarily to the Batamandi unit. With the AIP being invoked and data generated from the plant under scrutiny, Ranbaxy will have to demonstrate that the issues that led to such data have been resolved—which could be a long, drawn-out process,” said analyst Prashant Nair at Citi Investment Research and Analysis.
On Tuesday, shares of Ranbaxy closed 4.58% up at Rs165.60 each on the Bombay Stock Exchange on a day the exchange’s benchmark Sensex index closed higher by 1.47%.
Reuters contributed to this story.
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First Published: Wed, Apr 01 2009. 01 16 AM IST