Shares of Ranbaxy Laboratories Ltd and Strides Arcolab Ltd dropped in Mumbai trading after the US raised manufacturing concerns following factory inspections.
The US Food and Drug Administration (FDA) issued an import alert against Ranbaxy’s plant in Mohali in India’s Punjab state, according to a notice dated on Friday.
Shares of Ranbaxy, the country’s largest drugmaker, dropped as much as 35 percent to 297.25 rupees, headed for the biggest loss since the shares started trading in January 1991.
“Some of the products they have filed from this unit will get postponed,” Rohit Bhat, a health-care analyst at B&K Securities India Pvt Ltd, said in a telephone interview. “The resolution of this unit might take another couple of years.”
Strides Arcolab Ltd said a facility in Bangalore received a warning letter after an inspection found reasons for concern. An import alert was placed on a Wockhardt Ltd factory in India in May. The checks may be a sign that the FDA is being more vigilant of overseas suppliers. The regulator inspects foreign drug facilities once every nine years on average, compared with once every 30 months for US plants, the US Government Accountability Office reported in September 2010.
Ranbaxy’s shares traded at 334.2 rupees, down by 27 percent, as of 11:42am and has lost a third of its value this year.
Strides’s shares fell as much as 6.8 percent to 839 rupees, headed for the biggest decline since Aug. 14.
Products from companies on the FDA’s import alert list may be subject to detention without physical examination.
Ranbaxy agreed in May to pay US$500 million to resolve fraud allegations made in a whistle-blower’s lawsuit and federal criminal charges that it sold batches of drugs that were improperly manufactured, stored and tested.
It also admitted to lying to the FDA about how it tested drugs at two of its Indian plants.
“It doesn’t seem that things have changed,” Bhat said. “Everyone knows that the company has been facing FDA compliance issues for their other units, but it was expected that they would have learned from earlier experiences and hoped that they would be able to clear the FDA for this unit.”
Strides responded to the FDA’s observations made during an inspection of a sterile manufacturing facility in Bangalore in June by implementing corrective actions, it said in a statement yesterday.
“The company is committed to work collaboratively and expeditiously with the US FDA to resolve concerns cited in the warning letter in the shortest possible time,” Strides said.