Reports of coming under US FDA scanner hammer Ranbaxy stock

14 July 2008

Mumbai: Shares of Ranbaxy Laboratories, which is set to be taken over by Japanese drug firm Daiichi Sankyo in a $4.6 billion deal, fell almost 10 per cent today, following reports that the generic drugs major is under investigations in the US for sale of sub-standard drugs.

The Ranbaxy stock suffered its largest one-day loss in almost seven years on the Bombay Stock Exchange on concerns that the ongoing probe may hit sales in the US market which accounts for a quarter of the company's sales.

Reports, quoting sources, said the US Food and Drug Administration moved the court saying the quality of drugs made at one of Ranbaxy's domestic plants was poor.

A spokesperson for Ranbaxy, India's top drug maker by sales, said the FDA had filed a motion in a US court seeking documents from Ranbaxy, as part of an ongoing investigation, but denied initiation of any legal proceedings against the company.

Reports quoting the the Star-Ledger said the FDA filed the the complaint in the US district court of Maryland on 3 July after it found that the Ranbaxy drugs had too little or too much active ingredient or lacked the labelled shelf life and didn't meet US FDA standards.

''Ranbaxy strongly denies these allegations contained in the motion," said a company spokesperson.