Ranbaxy Got FDA Notice of Possible Punjab Plant Violations

Jan 13, 2014 5:58 am ET

(Updates with comment from analyst in third paragraph.)

Jan. 13 (Bloomberg) -- Ranbaxy Laboratories Ltd., India’s largest drugmaker, said it was notified by the U.S. Food and Drug Administration that a recent inspection of a plant in Punjab found possible violations. The stock declined.

The company received a Form 483, a document that lists possible violations of the Food Drug and Cosmetic Act, after its ingredient manufacturing unit in Toansa, Punjab was inspected, it said in a stock exchange statement today.

Products from three Ranbaxy plants in India are already prohibited in the U.S. because of quality control issues. The Punjab plant makes 60 to 70 percent of the company’s active pharmaceutical ingredients, or the drug components it sells in bulk to manufacturers, according to Sarabjit Kour Nangra, an analyst at Angel Broking Ltd. in Mumbai.

“This is the first alert you get from the U.S. FDA,” she said. “If they don’t resolve it, it could lead to further complications.”

The Gurgaon-based company will respond to the FDA’s notice “to resolve the concerns at the earliest,” it said in the statement. Revenue from active pharmaceutical ingredients was $137 million, or 6 percent of total sales, in 2012, according to the annual report of the unit of Daiichi Sankyo Co.

Shares of Ranbaxy fell 5.4 percent, the most since Sept. 16, to 438.80 rupees at the close in Mumbai trading. The stock was the biggest loser on the 16-company S&P BSE India Healthcare Index today.

U.S. Settlement

The Indian drugmaker agreed in May to pay $500 million to resolve fraud allegations made in a whistle-blower’s lawsuit and federal criminal charges that the company sold adulterated drugs while lying about it to U.S. regulators.

Ranbaxy’s competitor Wockhardt Ltd. was in November banned from selling some medicines to the U.S. from its most lucrative factory in India after U.S. regulators added it to a list of restricted facilities. When FDA inspectors visited the Wockhardt plant in July, they found inconsistencies in drug-test results, urine spilling over open drains, soiled uniforms and mold growing in a raw-material storage area. Those findings were detailed in an official document obtained by Bloomberg via a Freedom of Information Act request.

--Editors: Anjali Cordeiro, Suresh Seshadri