Ranbaxy shares dive nearly 20% on USFDA restrictions
Mumbai: Shares of Ranbaxy Laboratories on Friday fell sharply by nearly 20 percent after the US health regulator banned the import of products from its fourth plant, halting the shipment of all the company's drugs to the US.
After slumping 19.9 percent to Rs 334.10 in intra-day trade at the BSE, the drug major's scrip finally ended at Rs 335.65, down 19.54 percent.
At the NSE, Ranbaxy's scrip tanked 18.94 percent to close the day at Rs 338.40.
Following the dip in the stock, the company's market value dropped by Rs 3,416 crore to Rs 14,260 crore.
"With this import alert, the operations of the company in US business which contributes 40 per cent could come under impact, unless it can compensate for the same at the earliest and mange a smooth supply of key raw material," said Sarabjit Kour Nangra, VP-Research, Pharma, Angel Broking.
Citing manufacturing norm violations, the US Food and Drug Administration (USFDA) prohibited Ranbaxy Laboratories from distributing drugs produced at the Toansa unit in Punjab, including medicines made by the company's Ohm Laboratories facility in New Jersey.
In an order yesterday, the USFDA also prohibited Ranbaxy from providing active pharmaceutical ingredients from Toansa to other companies, including other Ranbaxy facilities, that make products for American consumers.
"We are taking swift action to prevent substandard quality products from reaching US consumers," said Carol Bennett, acting director of the Office of Compliance in the FDA's Center for Drug Evaluation and Research.
The USFDA said it exercised its authority under a provision in a January 2012 consent decree, which permits the agency to extend those terms to any Ranbaxy-owned or operated facility if an FDA inspection finds it in violation of the Federal Food, Drug, and Cosmetic Act or FDA regulations, including current good manufacturing practice requirements.
"This development is clearly unacceptable and an appropriate management action will be taken upon completion of the internal investigation," Ranbaxy Chief Executive Officer and Managing Director Arun Sawhney said.