More trouble for Ranbaxy; Mohali unit may also have come under USFDA lens

After its Paonta Sahib and Dewas units, Ranbaxy's third and newly commissioned Mohali facility, too, appears to have come under the US regulator's scanner. After finding deviations from its norms during an inspection of the plant, the US Food and Drug Administration (FDA) is learnt to have issued a Form 483 to the company's manufacturing facility at Mohali a few months ago.

A Form 483 is issued by the FDA at the conclusion of an inspection to notify the company of objectionable conditions that might be in violation of the US Food, Drug and Cosmetic Act and related laws. However, it does not prevent a company from making regulatory filings from that unit.

When asked, a Ranbaxy spokesperson said: "We continue to make regulatory submissions from Mohali and will commercialise products from Mohali when we get approvals." The firm did not respond to specific queries on the FDA inspection and Form 483. The FDA, too, neither confirmed nor denied the information.

According to sources, FDA inspectors visited the Mohali plant in the process of giving approval to Ranbaxy's application for Valsartan, the generic version of Novartis' Diovan. However, the inspectors observed lapses and violations at the plant and issued Form 483, highlighting the problems, sources said.

The move assumes significance primarily because the Mohali unit formed an important part of Ranbaxy's strategy, a source said. After Paonta Sahib and Dewas were blocked, the company was faced with capacity constraint at its US-based Ohm Labs. It then planned, in late 2011, to move key products from Ohm to Mohali. However, those plans might get stalled if Ranbaxy fails to take corrective measures soon. The move might also impact approvals of other products manufactured at the facility.

"In the Indian context, there is no mandatory requirement for a company to make a disclosure to the public or its stakeholders on receiving Form 483. Past experience has shown that the level of disclosure varies across companies, depending on their assessment of how significant the impact is likely to be on the business," says Amit Chander, partner, Baring Private Equity.

He says companies usually would not share such information with their investors or stakeholders in the first instance, as these are sensitive matters and might or might not impact their businesses. "If the issue is likely to be resolved with the regulator, the company could wait before making it public and prefer to make a disclosure once a final decision has been taken on the matter by the regulator," Chander added.

According to an official in know of the developments, approvals for various products applied from the Mohali facility could be stuck with USFDA because of the deviations. The company, however, maintains it continues to make submissions from the facility in question.

Ranbaxy, which was expected to secure an approval for Diovan generic in September last year, has yet to get a go-ahead from the regulator. In fact, after the company missed its first deadline, Pennsylvania-based Mylan had also sued USFDA. It claimed Ranbaxy forfeited its right to the six-month exclusivity to sell the drug by not winning the US regulator's approval. However, in late December, a US district court ruled in favour of Ranbaxy, on the grounds that the delay in approval was caused due to a change in approval requirements.

"It has been almost six months since December and Ranbaxy has yet to get an approval for either Valsartan or for any other product from Mohali," says an industry source. He points out Ranbaxy also did not resume supplies of Lipitor generic from Mohali to the US, after it had to recall the drug because of a suspected presence of glass particles. Instead, it restored supplies only from its US-based Ohm Laboratories.

Sources said Ranbaxy had moved its application for Diovan generic to Ohm Laboratories and FDA was in the process of reviewing the new application. The company had opted for a similar strategy to gain approval for Lipitor generic, after its manufacturing sites at Paonta Sahib and Dewas had come under USFDA's import alert.

Last month, Ranbaxy pleaded guilty in the US of making fraudulent statements to USFDA for gaining approvals for its products. It also agreed to pay $500 million to the US Department of Justice (DoJ) as penalty. The company, now owned by Japan's Daiichi Sankyo, is also undergoing a consent decree with USFDA and DoJ to take corrective measures at two of its ailing units in India.
WHAT'S FORM 483?

• Issued by USFDA at the conclusion of an inspection to notify a company of violation of the US Food Drug and Cosmetic (FD&C) Act and related Acts
• Does not prevent a company from making regulatory filings from the unit

WHY MOHALI UNIT MAY HAVE GOT IT

• USFDA inspectors visited the plant in the process of giving approval to application for Valsartan, the generic version of Novartis' Diovan
• They observed lapses and violations at the plant