Ranbaxy recalls generic Lipitor from the US market

MUMBAI: Ranbaxy Laboratories, India's largest drugmaker by sales, said on Friday that it has recalled its cholesterol-lowering drug atorvastatin from the US markets due to some "issues", but declined to elaborate further.


The recall will cause temporary disruption of atorvastatin supply to the US while the company expects to complete its investigation and resume supplies in two weeks time, Ranbaxy said in a statement. This news sent Ranbaxy's shares down by almost 3 per cent, closing at 495.95 at the end of Friday's trade.

The development comes less than a year after Ranbaxy settled its three-year-old dispute with the USFDA and Department of Justice by paying a $500-million fine, and signing a consent decree to clean up its manufacturing facilities in Paonta Sahib in Himachal Pradesh.

Atorvastatin is the generic name for Pfizer's blockbuster drug Lipitor, which went off patent last November, and is crucial to Ranbaxy as it was the first company to get a 180-day exclusivity over this drug.

"Since the company has shared limited information, it is difficult to gauge the severity of the problem. However, if there's a manufacturing issue, then it's really bad for Ranbaxy," said Ranjit Kapadia, VP Centrum Capital.

Surjit Pal of Elara Capital echoed Kapadia's view, saying lack of details over this recall spells trouble for the company. "We don't know who has recalled the drug, who is investigating the issue and at which manufacturing site this recall has happened," said Pal.

Ranbaxy earned close to $600 million from the sale of atorvastatin during the exclusivity period, though it had to share half its sales with Israeli drugmaker Teva. The drug helped boost significantly the company's revenues in the first half of the year.

However, since the 180-day exclusivity has expired, the price of atorvastatin has crashed by 96 per cent and eight players are selling the drug in a crowded market.

According to estimates, the present contribution of atorvastatin to Ranbaxy's total sales ( 550 crore) would be close to 139 crore. So, the impact of this decision would be limited.

"This is an off patent product and there is already a significant price erosion in this drug, so this news will have little impact on the company," said Sarabjit Kour Nangra, VP Research, Angel Broking.

Ranbaxy, promoted by Delhi-based businessman Malvinder and Shivinder Singh, was sold to Daiichi in 2008 for $4.6 billion. However, within months of this acquisition, the USFDA banned 30 drugs and stopped approval of new ones from two of Ranbaxy's plants as it held the firm guilty of violating US drug manufacturing rules.

It was only after four years of long and painstaking negotiations with the US FDA that Ranbaxy got a breather when it agreed to sign the consent decree.