Ranbaxy Pays $500M For Manufacturing Problems

Ranbaxy Pays $500M For Manufacturing Problems

December 22nd, 2011 // 1:58 pm @

And so, the other shoe has dropped. When the FDA granted last-minute approval on November 30 for Ranbaxy Laboratories to sell a generic version of the Lipitor cholesterol pill, there was no mention of a settlement for serious manufacturing problems that sidelined key plants run by the Indian drugmaker (read here). Now, though, a deal has been reached.

Ranbaxy will pay $500 million to resolve a long-running investigation by the FDA and has also entered into a consent decree. “While we were disappointed by the conduct that led to the FDA’s investigation, we are proud of the systematic corrective steps we have taken to upgrade and enhance the quality of our business and manufacturing processes,” Ranbaxy ceo Arun Sawhney says in a statement.

Three years ago, federal prosecutors cited the Indian drugmaker for allegedly falsifying records that resulted in the production and sale of meds failing to meet FDA standards. The allegations included fabricating bioequivalence and stability data to support AIDS drugs to be paid for by the President’s Emergency Plan for AIDS Relief program (PEPFAR) and distributed to foreign countries (back story).

Then, the FDA issued warnings letters and banned more than 30 meds made at two plants in Dewas and Paonta Sahib in India (see here). Since then, Daiichi Sankyo, which agreed to pay $4.6 billion for Ranbaxy despite these problems, has overhauled management, although the Japanese drugmaker cut pay for executives and directors, and slashed its profit forecast because of the $500 million payout, according to Bloomberg News. The settlement is 16 percent of Ranbaxy’s market value, which “is much above our expectation,” Bino Pathiparampil, an analyst at IIFL in Mumbai, India, tells the news service. “This could wipe out the company’s profits for this year and the next.”

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