The American drug regulator has revoked Ranbaxy Laboratories' tentative approval for selling copycat low-cost versions of blockbuster heartburn drug Nexium and antiviral drug Valcyte in the world's largest drug market.
USFDA said it had made an error in granting approval given the compliance status of the plants which were to produce the generic versions of the blockbuster drugs.
The move takes out a big revenue earning potential for the Indian drugmaker, which was also seen as a critical part of the proposed deal with Sun Pharma.
Sun Pharma had announced plans to acquire Daiichi Sankyo-controlled Ranbaxy in an all stock deal worth $4 billion, including debt. The proposed transaction awaits regulatory clearances.
Both, Sun Pharma and Ranbaxy scrips opened in the red but bounced back and were trading in the positive zone in mid-day trades.
Meanwhile, Dr Reddy's scrip shot up almost 5 per cent as it was granted joint approval along with US-based Endo for one of the above mention drugs Valcyte. Valcyte is an antiviral medicine made by Roche.
Valcyte has a market size of around $500 million in the US and can add $30-40 million to the sales of Dr Reddy's.
Ranbaxy held an approval for the two drugs even though all its four manufacturing units in India are currently barred from making products for sale in the US.
The delay in launching low cost versions of the medicines was also affecting US consumers as they were forced to buy the original innovator drug at a higher price.
Ranbaxy, which would have been the first company allowed to make a generic version of AstraZeneca's Nexium, said in a market disclosure, “We are disappointed by the ruling and were actively evaluating all available options to preserve its rights.”
Ranbaxy has been under the scanner of USFDA over various issues which had led the US drug regulator to ban import of products made at all its Indian plants.
Earlier this year USFDA had prohibited Ranbaxy from producing and selling active pharmaceutical ingredients for American markets from its Toansa facility in Punjab, citing manufacturing violations. With this, all Indian plants of the company had been banned from shipping products for sale in the US.
Previously, USFDA had banned Ranbaxy from selling products made at its factories in Paonta Sahib, (Himachal Pradesh), Dewas (Madhya Pradesh) and Mohali (Punjab) over irregularities.
Ranbaxy managed to launch a generic version of Novartis’ blood-pressure drug Diovan in June after a long delay by moving production to a US-based facility, which has not attracted scrutiny from USFDA, which helped it post its first quarterly profit in over a year for the three months ended September 30.
(Edited by Joby Puthuparampil Johnson)