Woes Galore For Ranbaxy Laboratories

The woes for Ranbaxy Laboratories seem to be unending. In a recent development this morning (January 24, 2014), the USFDA has shared its views on the investigation that it conducted on the Toansa facility.

The administrative body has prohibited the company from manufacturing and distributing active pharmaceutical ingredients (APIs) from its facility in Toansa. The Toansa facility is now subject to certain terms of a consent decree of permanent injunction entered against Ranbaxy in January 2012.

Under the decree, the FDA has issued an order prohibiting Ranbaxy from:

• distributing in the United States drugs manufactured using API from Toansa, including drugs made by Ranbaxy's Ohm Laboratories facility in New Jersey;
• manufacturing API at its Toansa facility for FDA-regulated drug products;
• exporting API from Toansa to the United States for any purpose; and
• providing API from Toansa to other companies, including other Ranbaxy facilities, making products for American consumers.

In the release the FDA has also identified significant CGMP violations. These included Toansa staff retesting raw materials, intermediate drug products, and finished API after those items failed analytical testing and specifications, in order to produce acceptable findings, and subsequently not reporting or investigating these failures.

Now the company has to hire a third party expert who will thoroughly inspect the facility. In our report "US FDA Woes Continues For Ranbaxy Laboratories" dated January 13, 2014 we have clearly mentioned that negative sentiment will be an overhang for the counter. Today till now the stock is down by 17% on the bourses to trade at Rs 346.