US FDA removes its earlier shadow on firm's American unit; shift of output & supply from tainted Indian units enabled.
Ranbaxy's US factory, Ohm Laboratories, is learnt to have got a clean chit from the American regulator. This US facility was under surveillance of the Food and Drug Administration (FDA) since the end of 2012.
This would enable Ranbaxy, owned by Daiichi Sankyo of Japan, to continue supplying from this unit; it could also allow it to shift some pending applications to Ohm from its Mohali unit in India, under an FDA import alert, to avoid delays in product launches.
The New Brunswick manufacturing facility had, in December last year, received an FDA Form 483 (observations after an inspection), with a listing of deviations from US 'good manufacturing norms'. However, earlier this month, the FDA issued an Establishment Inspection Report (EIM) to Ohm, indicating closure of the enforcement at the facility.
The development is significant as Ohm Labs is the final resort for Ranbaxy to cater to the US market, not only the world's largest in pharmaceuticals but also contributing a huge chunk to the company's consolidated revenues. Ranbaxy's three other FDA-approved manufacturing factories, all located in India - Paonta Sahib (Himachal Pradesh), Dewas (Madhya Pradesh) and Mohali (Punjab) - are under the regulator's import alert and barred from supplying to the US.
The US market contributed a little over 40 per cent to Ranbaxy's total revenue till last year, when the company enjoyed 180 days of exclusive marketing rights on its Lipitor generic. During 2012, the company had sales of Rs 4,968 crore in the US, of consolidated sales for the year at Rs 12,253 crore.
Experts view the move as a major positive for the company. "Ranbaxy is facing tough times in the US and it is good news that it has resolved the issues at Ohm Labs at an early stage; else, they'd have lost ground completely. I am hopeful that this will restore some confidence among Ranbaxy stakeholders," a senior pharma sector analyst said.
According to Ranbaxy's website, Ohm manufactures solid dosage forms of analgesics, antibiotics, anti-diarrhoeal, laxatives, antacids and cough & cold remedies.
The facilities at Paonta Sahib and Dewas are under FDA enforcement since 2008, undergoing a consent decree (agreeing to work on FDA stipulations to come up to the required standard, before being allowed to ship further consignments), after paying a penalty of $500 million to the US regulatory authority earlier this year. There was a fresh problem in September, when the US regulator imposed an import alert on the Mohali facility, blocking supply of medicines from all Ranbaxy factories in India. The FDA also extended the ongoing consent decree, under a special provision, to the Mohali facility.
Ranbaxy was expected to have made key filings from the Mohali facility. These included some first-to-file products such as Diovan, Nexium and Valcyte, where it could have gained exclusive marketing rights for 180 days. Analysts hope some of these products might be shifted to Ohm Labs.
"Extending the consent decree possibly means that resolution at Mohali will take some time. A general consent decree takes two-three years for resolution, with complicated deviations possibly taking much longer," said an analyst.
The decree, signed by Ranbaxy in 2012, contains provisions to ensure current good manufacturing compliance at Paonta Sahib and Dewas, as well as provisions addressing data integrity issues.
Under the decree, Ranbaxy is required to hire a third-party consultant to conduct a thorough inspection of the facility and certify to the regulator that the facilities, methods, processes, and controls are adequate to ensure continuous compliance with good manufacturing norms.
On Thursday, shares of Ranbaxy closed at Rs 393.15 on the BSE exchange, up 3.3 per cent from Wednesday's close.
What does an Establishment Inspection Report (EIR) mean?
US FDA issues an EIR to a company or an establishment that was subject of an FDA or FDA-contracted inspection when the regulator determines the inspection to be "closed"
IN & OUT OF GLARE
US FDA actions on Ranbaxy so far
Jun '06: Warning letter to Paonta Sahib facility
Sep '08: Warning letter to Batamandi facility
Sep '08: Warning letter to Dewas facility
Sep '08: Import alert on products from Dewas and Paonta Sahib plants
2009: Application Integrity Policy invoked against Paonta Sahib unit
2012: Ranbaxy signs consent decree for Paonta Sahib, Batamandi & Dewas units
Dec '12: Mohali (India) factory and Ohm Labs in the US inspected
2013: Form 483 issued to Ohm Labs and Mohali unit
May '13: Ranbaxy pleads guilty to fraudulent activities, agrees to pay a $500-mn fine
Sep '13: Import alert on Mohali facility; consent decree extended to include the unit
Oct '13: Ohm Labs gets Establishment Inspection Report from the US FDA, indicating closure of enforcement