Ranbaxy falls 8% on reports USFDA inspecting Punjab unit

MUMBAI: Shares of pharmaceutical major Ranbaxy Laboratories were witnessing selling pressure following media reports that the USFDA has begun inspection of its active pharmaceutical ingredient or API manufacturing factory at Toansa in Punjab.

The stock plunged as much as 8 per cent in morning trade to hit its day’s low of Rs 426. The stock was trading at Rs 431.75, down 6.8 per cent, on the BSE at11:00 a.m.

The Toansa plant is crucial for the company as about 70 per cent of APIs used in its formulations are said to be manufactured there.

The US Food and Drug Administration (USFDA) inspection teams had in December 2012 written to the company identifying eight violations in the manufacturing practices at its main API (active pharmaceutical ingredient) unit at Toansa in Punjab, said media reports.

“From fundamental perspective, the product launches whether it is Diovan or Valcyte or the upcoming Nexium launch, all these three are very important triggers for Ranbaxy. If you look at it in terms of earnings trajectory, if these three products come through, the earnings could look at significantly higher level than what they are doing of late,” said Arvind Bothra, Pharma Analyst, Religare to ET Now recently.

“That could explain part of the upmove. There could also be other investor-related expectations on corporate action which of course has little to do with the fundamentals. Should these three important product approvals come through, you would get some more comfort on the earnings,” he added.