Ranbaxy shares fall on FDA letter to unit

Ranbaxy shares fall on FDA letter to unit

New Delhi: Shares in Ranbaxy Laboratories fell as much as 4% on Tuesday morning on news the US Food and Drug Administration (FDA) had warned a US unit about violations of good manufacturing practices.

Ranbaxy said after the market close on Thursday it had received a letter dated 21 December about violations at its Ohm unit’s liquid manufacturing facility in New York.

Stock markets were closed on Friday and Monday, and in the first market reaction to the news, Ranbaxy shares fell as much as 4%. At 0600 GMT the shares were down 1% at Rs514.80 in a Mumbai market up 0.1%.

“It will have some impact on the stock but not a devastating impact," said Sarabjit Kour Nangra, a pharmaceuticals analyst with Mumbai’s Angel Broking.

Ohm has two other plants in the US from where it can make key drugs such as the generic version of GlaxoSmithKline’s Valtrex, Nangra said.

Citigroup analysts said in a note the FDA warning was a dampener for the stock but would have “negligible" financial impact as the facility accounts for under a tenth of Ranbaxy’s US sales.

They also said Ranbaxy’s first-to-file pipeline appeared to be secure and there was no fresh risk to its valuations.

“We would view any dip as an enhanced buying opportunity," the analysts said, who have a “buy" rating on the stock.

Ranbaxy is majority owned by Japan’s Daiichi Sankyo.

Late last year, Ranbaxy shares had plummeted after a US ban on some of its products from two of its plants in India. The FDA in February said Ranbaxy had sold misbranded or adulterated drugs in the US, its largest market.