Ranbaxy shares drop the most in two months after FDA hurdle - Livemint

The US food and drug administration (FDA) blamed the ‘compliance status’ of Ranbaxy’s factories for its decision, the company said on Thursday. Photo: Mint

Mumbai: Ranbaxy Laboratories Ltd fell the most in almost two months in trading on BSE after US regulators withdrew their tentative approval for its generic versions of the heartburn tablet Nexium and antiviral medicine Valcyte.

Ranbaxy dropped as much as 4.7%, the largest intra-day decline since 11 September, and traded 4% lower at Rs.629 as of 9:19am. Sun Pharmaceutical Industries Ltd , which this year agreed to buy Ranbaxy, lost as much as 4.1%.

The US food and drug administration (FDA) blamed the “compliance status” of Ranbaxy’s factories for its decision, the company said on Thursday. The verdict means Ranbaxy, based in Gurgaon, won’t be entitled to an exclusive sales period for Valcyte when the drug is cleared for sale in the US.

“In FDA’s view, Ranbaxy has forfeited its eligibility for 180-day exclusivity for” Valcyte, Ranbaxy said in a statement, without mentioning the exclusivity period for Nexium. It declined to comment in an e-mail.

The exclusivity is typically granted to the first drug maker to file an application to sell a copycat of a medicine.

For Sun, the rescinded approvals add to the challenge of fixing four Ranbaxy facilities that have been banned from selling to the US. The Mumbai-based company offered in April to acquire Ranbaxy for $3.2 billion in stock.

A key attraction for Sun was Ranbaxy’s tentative FDA approvals to sell copycats of Nexium and Valcyte, as well as Diovan , the blockbuster hypertension drug from Novartis AG . In June, Ranbaxy said it had received final FDA approval for the Diovan generic.

AstraZeneca earned $3.9 billion last year from sales of Nexium, its second-biggest drug. Valcyte, made by Roche Holding AG , garnered sales of $748 million in 2013.

Ranbaxy shares were down 2.4% at Rs.638.60 apiece at 10:15am on Friday on BSE, while the benchmark Sensex was trading 0.23% lower at 27,851.75. Bloomberg