New Delhi/Mumbai: Shares of Ranbaxy Laboratories Ltd fell 7% on Monday after US pharma company Mylan Inc. sued that country’s Food and Drug Administration (FDA) in a Washington court seeking an injunction against the former’s launch of the generic version of Pfizer Inc.’s popular cholesterol lowering drug Lipitor.
Mylan’s complaint refers to the trouble Ranbaxy has been having with FDA regarding the regulatory compliance of two of its factories. Mylan contends that Ranbaxy isn’t eligible for that marketing exclusivity because of “false and unreliable data” from its manufacturing site in Paonta Sahib, India, used in Ranbaxy’s application for generic Lipitor.
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It also seeks to expedite an approval of its own generic equivalent of the cholesterol fighting drug that has been developed by its Indian subsidiary Matrix Laboratories Ltd. It wants FDA to allow it to enter the market in June, when Pfizer’s patent on Lipitor expires.
A spokesperson for Ranbaxy declined comment.
Analysts said the case would have no bearing on FDA’s decision on Ranbaxy’s Lipitor application.
Ranbaxy currently holds a 180-day exclusivity for marketing generic Lipitor in the US through a deal with patent holder Pfizer. Lipitor is the world’s largest selling drug and had sales of approximately $5 billion (Rs22,550 crore today) in the US alone in 2010. In 2008, Ranbaxy entered into an agreement with Pfizer settling most of the patent litigation worldwide involving Lipitor (generic name Atorvastatin). Under the terms of the agreement, Ranbaxy received licence to sell its version in the US from 30 November 2011.
The six-month period of exclusivity may add around $585 million to Ranbaxy’s sales, according to the median of four analysts’ estimates taken before the lawsuit was filed. That would make the generic version the biggest product in the Indian drug maker’s history.
“I see no impact on Ranbaxy’s Lipitor application due to this case. Ranbaxy filed the application from Paonta Sahib; that this plant also has FDA’s application integrity policy (AIP) invoked on it. So, we don’t know if Ranbaxy will hold its exclusivity, but this will not impact its application,” said Hemant Bakhru, analyst with Mumbai-based foreign brokerage CLSA.
An analyst in the Mumbai office of a foreign brokerage seconded that opinion and said that the impact on the stock was “sentimental”. He asked not to be identified citing his company’s policy.
Mylan wants a court to force FDA to say publicly whether Ranbaxy’s application “is tainted by Ranbaxy’s misconduct” and that, therefore, the application must be denied and the 180-day reward voided. “FDA’s indecision is depriving millions of Lipitor patients access to lower-cost generic Lipitor,” Mylan said in its complaint. It’s “costing the public billions of dollars in savings, and costing generic manufacturers billions of dollars in lost sales”.
The question on the data generated by Ranbaxy for Atorvastatin arose when FDA invoked its AIP on Ranbaxy’s Paonta Sahib plant in Himachal Pradesh in February 2009. This move came soon after FDA had issued warning letters and an import alert to two of Ranbaxy’s plants—Paonta Sahib and Dewas (Madhya Pradesh).
Under the AIP at Paonta Sahib, FDA halted all scientific review of Ranbaxy’s pending generic drug applications from that plant as well as applications for which data could be traced back to that plant. It is believed that the data for Atorvastatin was generated at Paonta Sahib.
Last year, FDA refused to approve Ranbaxy’s launch of the generic version of blockbuster urinary drug Flomax, another drug for which it had a marketing exclusivity deal.
Graphic by Ahmed Raza Khan/Mint
Bloomberg contributed to this story.