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Business News/ Companies / News/  Ranbaxy gets FDA nod for generic version of Novartis’s Diovan; shares surge 5%
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Ranbaxy gets FDA nod for generic version of Novartis’s Diovan; shares surge 5%

The firm, first to launch a copy of Diovan in the US, will get six months of exclusivity to sell it

The drug should add about $200 million to Ranbaxy’s sales and $100 million to its profit after tax during the exclusive sale period, a Mumbai-based research analyst said. Photo: Pradeep Gaur/MintPremium
The drug should add about $200 million to Ranbaxy’s sales and $100 million to its profit after tax during the exclusive sale period, a Mumbai-based research analyst said. Photo: Pradeep Gaur/Mint

Washington/Mumbai: Ranbaxy Laboratories Ltd has received approval from the US Food and Drug Administration (FDA) to launch a cheaper copy of Novartis AG’s blood pressure pill Diovan, bolstering its outlook after a raft of regulatory bans for poor production quality at its India facilities dented investor sentiment.

Ranbaxy, which is in the process of being acquired by drug maker Sun Pharmaceutical Industries Ltd for $3.2 billion (about 19,200 crore), will be the first company to launch a copy of Diovan in the US and will be entitled to six months of exclusivity to sell it.

The drug should add about $200 million to Ranbaxy’s sales and $100 million to its profit after tax during the exclusive sale period, said Praful Bohra, a senior research analyst at Mumbai-based brokerage Nirmal Bang Securities Pvt. Ltd.

Swiss drug maker Novartis lost its patent rights to its once best-selling Diovan in the US at the end of 2012, but has avoided generic competition because of multiple production quality control problems at Ranbaxy.

All of Ranbaxy’s India-based plants have been barred by the FDA from exporting to the US due to violations of its good manufacturing practices. Ohm Laboratories, a unit of Ranbaxy in New Jersey, is allowed to make drugs for its largest market.

The FDA over the past year has stepped up its scrutiny of drug makers in India, which is the biggest supplier of medicines to the US.

Worries about quality control problems in India’s $15 billion drug industry came to the fore as multiple plants run by companies including Ranbaxy and Wockhardt Ltd were barred from exporting to the US.

Bill Winter, a vice-president at New Jersey-based Ohm Labs, said in a statement the Diovan generic would be launched “as soon as sufficient supplies are manufactured to meet the needs of the market."

Ranbaxy’s shares rose 5.38% to 497.15 on BSE, while Sun Pharma gained 3.97% to 660.65, pushing the health care sub-index to a record high.

First to file

The Ranbaxy statement did not say when the generic version of Diovan, which had global sales of $3.5 billion in 2013, will be launched. A Ranbaxy spokesman in India did not respond to a request for comment.

Ranbaxy was also the first company to file with the FDA seeking approval to launch generic versions of two other top-selling drugs—AstraZeneca Plc’s blockbuster heartburn drug Nexium and Roche’s (F Hoffmann-La Roche Ltd) antiviral Valcyte.

These two drugs are pending final approval from the FDA.

Last month, Ranbaxy chief executive Arun Sawhney said he was “confident" that the company would be able to reap the benefits of these exclusive marketing opportunities.

He did not elaborate.

“I think the Diovan generic approval is definitely a validation of their comment that they will be able to launch Valcyte and Nexium as well," Nirmal Bang’s Bohra said. Reuters

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Published: 27 Jun 2014, 10:00 AM IST
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