US FDA Woes Continues For Ranbaxy Laboratories

Ranbaxy Laboratories, Toansa API plant in Punjab has received form 483 from the US FDA with certain observations. This plant is said to be manufacturing around 70% of the API requirements of the company. This does not augur well for the company as the plants be it Poanta Sahib and Dewas are under the US import alert since 2008.

Let us take a look at what does this 483 mean. It is a form that is issued by the FDA to the management at the conclusion of an inspection when an investigator has observed any conditions that in their judgment may constitute violations of the Food Drug and Cosmetic (FD&C) Act and related Acts. The FDA Form 483 notifies the company's management of objectionable conditions. At the conclusion of an inspection, the FDA Form 483 is presented and discussed with the company's senior management. Companies are encouraged to respond to the FDA Form 483 in writing with their corrective action plan and then implement that corrective action plan expeditiously, otherwise could lead to the import alert.

The management has clarified to the exchanges that the company is assessing the observations, and will respond to the US FDA in accordance with the agency's procedure to resolve the concerns at the earliest. However, failing to address these concerns would result in the FDA banning all exports to the United States from this factory.

This is a big concern for the company as its India-based factories are currently banned by the FDA from exporting medicines to the United States for violation of good manufacturing practices. The stock ended at Rs 438 down by 5.42% in today's trade. Negative sentiment in the stock in future trades cannot be ruled out.