Dilip Shanghvi-controlled Sun Pharmaceuticals has a stellar record in turning around distressed assets.
For Ranbaxy Laboratories, which is nursing a welter of festering wounds from run-ins with regulators to employee exits and penalties for felonies, a change in ownership marks yet another milestone in its nearly five-decade old history peppered by a rapid slide from a poster boy to an industry problem child.
In January, the US Food and Drug Administration (FDA) blacklisted Ranbaxy’s Punjab-based Toansa plant — the generic drug makers’ fourth factory to face such an import ban — dealing a body blow to the firm’s reputation.
Japanese drug maker Daiichi Sankyo had bought the company for $4.6 billion (`20,000 crore then) in 2008 from its former promoters — Malvinder Mohan Singh and family. But, problems started soon after the headline-grabbing deal six years ago.
The export bans have forced the company to negotiate through a maze of scrutiny before it can introduce new products in key markets including the US.
The result: Drop in earnings by up to 40% over the next one year as exports from its Indian plants are effectively ruled out for the time being, analysts warned.
It could also hit the company’s plans to exploit the “patent cliff” opportunities, ruling out a shot at cornering a slice of a multi-billion dollar opening of drugs whose patents would expire soon.
In recent years, Ranbaxy has faced most questions on its production practices and hygiene standards compared to its domestic peers.
In 2008, the USFDA had banned 30 generic drugs produced by Ranbaxy at its Dewas and Paonta Sahib units in India. In September 2013, the USFDA blacklisted Ranbaxy’s Mohali plant, effectively stopping shipments of 11 medicines, including the generic version of blood-pressure drug Diovan, produced in the plant.
This had raised questions about the violation of hygiene and manufacturing norms even by Daiichi Sankyo, although in May, it had blamed the company’s former Indian owners for concealing and misrepresenting critical information about US investigation into sale of adulterated drugs and filed for arbitration in a Singapore court.
In September last year, the US drug regulator blacklisted Ranbaxy’s Mohali plant effectively stopping shipments of 11 medicines, including the generic version of blood-pressure drug Diovan, produced in the plant.
The Mohali plant was commissioned in 2011, three years after the Japanese drug maker bought Ranbaxy. This has raised questions about the violation of hygiene and manufacturing norms even by Daiichi Sankyo.
In May last year, Daiichi Sankyo blamed the company’s former Indian owners for concealing and misrepresenting critical information about US investigation, after it had agreed to pay $500 million as penalties for selling adulterated medicines in the US and lying about it to authorities.