Ranbaxy shares down over 3% after drug recall in US
Mumbai: Shares of Ranbaxy on Friday slumped over three percent on the bourses after the company said it has recalled its cholesterol-lowering drug Atorvastatin from the US market.
"The company has made a recall of Atorvastatin from the USA market which will cause temporary disruption to that market of this product," the company said in a statement.
Reacting to the news, shares of the company tanked 4.18 percent to an intra-day low of Rs 491.25 on the BSE. The company however, recovered some lost ground and settled for the day at Rs 495.95, lower by 3.27 percent from its previous closing price.
Following the slump in the share price, the market capitalisation of the company shrunk by Rs 410 crore to Rs 20,952 crore, in just a single trading session. The market worth of the company stood at Rs 21,362 crore yesterday.
"The investigation with regard to the same of this issue is expected to be completed within two weeks and thereafter the Company expects to resume supplies," the company release said.
Meanwhile, on the National Stock Exchange as well, the stock witnessed similar movement. It opened at Rs 513.15, then fell to an intra-day low of Rs 490.70. The stock finally ended the day at Rs 495.85, lower by 3.28 percent from its last close.
Ranbaxy was the first company to launch generic Lipitor in the US market after Pfizer's patent expired last year. The Indian company enjoyed marketing exclusivity for the first six months.
According to an analyst, the company generated sales of USD 600 million during its exclusive marketing period.
Atorvastatin, the generic equivalent of Pfizer's Lipitor drug, generated total annual sales of USD 7.89 billion in the United States through September, 2011.
At present, the company is in the process of settling issue with the USFDA which in 2008 banned import of 30 generic drugs manufactured at its facilities at Dewas (Madhya Pradesh), and Paonta Sahib and Batamandi units in Himachal Pradesh for gross violation of manufacturing norms.
In January this year, the US Justice Department sought a permanent injunction against Ranbaxy, a move that required the Indian pharmaceutical major to make fundamental changes at its plants both in the US and India.
In December 2011, Ranbaxy had filed a consent decree with a US court as part of its settlement with the American authorities and said it had earmarked up to USD 500 million for settlement with the US authorities.
Ranbaxy's dosage forms facility at Mohali was approved by the US Food and Drug Administration (FDA) in October 2011.
Japanese drug-maker Daiichi Sankyo had acquired majority stake in Ranbaxy in 2008 for a total outgo of around Rs 22,000 crore.