USFDA scrutiny: Will pharma majors like Ranbaxy, Wockhardt be affected in long-term?...

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USFDA scrutiny: Will pharma majors like Ranbaxy, Wockhardt be affected in long-term? By G Seetharaman, ET Bureau | 26 May, 2013, 10.45AM IST 5 comments|Post a Comment READ MORE ON Wockhardt | USFDA | Sunday ET | Sanofi Aventis | Ranbaxy Laboratories Ltd. | Ranbaxy | PricewaterhouseCoopers
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Manufacturing-related indiscretions of Indian firms put a question mark on prospects for generics exports. Editor's Pick Mphasis sales growth beats street expectations ONGC Q4 net slumps 40%, lags expectations Tata Motors Q4 PAT at Rs 3945 crore 'Tata Motors faces very challenging environment' Tata Motors announces launch of driving centre in MP Wockhardt Ltd. BSE NSE 1121.80 1121.75 -124.60(-10.00%) -124.60(-10.00%) Vol: 315373shares traded Vol: 887810shares traded Prices | Financials | Company Info | Reports Japanese companies do not mind erring on the side of caution. They are known to think longer and harder than their counterparts in other countries about big decisions, especially when it comes to entering a new market or acquiring a foreign company. But Japan's third biggest drugmaker Daiichi Sankyo would now wish it had spent more time doing due diligence on Ranbaxy Labs, in which it bought a controlling stake in 2008 for $4.6 billion.

Just after the deal was announced, the US Food and Drug Administration (USFDA) banned import of 30 generic drugs from two of Ranbaxy's facilities in Madhya Pradesh and Himachal Pradesh which did not meet the FDA standards. One-two Punch Things got worse a few months after the deal was concluded when the USFDA accused Ranbaxy of falsifying data and test results at the plants. The drama came to a head when on May 13 Ranbaxy pleaded guilty to charges related to drug safety and falsifying data and agreed to pay $500 million, the biggest ever settlement by a generic drugmaker. Just under 10% of that will go to Dinesh Thakur, a former Ranbaxy executive who blew the whistle on the wrongdoings. Daiichi has now accused "certain former shareholders" of Ranbaxy of concealing critical information related to the USFDA and Department of Justice investigations. Ranbaxy's former chairman Malvinder Singh hit back at Daiichi saying there was no misleading and that the Japanese drug maker has not been able to manage the company. Ranbaxy has also been battling another hit to its image when in November it recalled its generic version of Pfizer's cholesterollowering drug Lipitor from the US after it found glass particles in some batches. Though it has since resumed protection, the recall and Ranbaxy's settlement could make the going tough for India's generics exporters. No sooner had the pharma industry swallowed this really bitter pill than the USFDA struck again this time banning import of generic drugs from Wockhardt's Aurangabad facility. While the stock took a hammering, dropping 20%, its chairman Habil Khorakiwala certainly did not help matters when he said there would be a $100-million hit on the company's sales. "I don't think the USFDA is targeting a certain company, they are internally tightening norms; that is all," he told ET.

http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/pharmace...

5/29/2013

USFDA scrutiny: Will pharma majors like Ranbaxy, Wockhardt be affected in long-term?... Page 2 of 2

Acting Tough

http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/pharmace...

5/29/2013