Australian pharmaceutical regulator, Therapeutic Goods Administration (TGA), has stated that it is reviewing 62 drugs sold in the country by Ranbaxy made at its Paonta Sahib facility.
This review is based on USFDA’s allegations that the company has falsified data and results in approved and pending drug application filed from its Paonta Sahib facility.
As a result, USFDA had invoked the Application Integrity Policy (AIP) halting approval of new drugs from the facility.
Australia is the third country after US and Canada where Ranbaxy’s products from the Paonta Sahib facility are facing scrutiny.
However, TGA has clarified that it did not find any evidence in its earlier inspection (November 2008) that Ranbaxy’s drugs did not meet the country’s manufacturing standard.
As Australia’s contribution to the company’s total revenue is minimal, we do not estimate material impact on its financials.
However, post the AIP invocation by the USFDA, Regulators of other countries could again review the drugs sold from the Paonta Sahib facility, which would continue to be a drag on the stock.
We maintain that the large FTF opportunities remain undamaged. Hence, we maintain a BUY on the stock, with a target price of Rs277.