Ranbaxy Laboratories, India’s biggest drugmaker, may lose as much as $140 million of revenue in 2009 after the US drug regulator blocked sale of more than 30 generic medicines and 7 APIs made in two factories of the company, according to analysts.
“The biggest hit would be on Sotret, a branded product with estimated sales of $60 million,” Prashant Nair, an analyst with Citigroup wrote in a note to its clients. He also downgraded the stock to “sell” from “buy”. Ranbaxy stock today fell 2.70 per cent to Rs 347.20 at close of trading on the Bombay Stock Exchange.
The FDA, while blocking the drug imports of Ranbaxy, cited violations including inadequate sterile-processing operations and record keeping at the company’s plants in Paonta Sahib and Dewas.
The US FDA has termed this as a precautionary measure as it has found no evidence that the products are defective. It also stated that all other Ranbaxy plants are being run as per the FDA requirement.
The import ban on Ranbaxy’s drug is unrelated to a US government investigation on whether the company fabricated data to get its medicines cleared for sale.
Meanwhile, Ranbaxy founders may have to pay as much as Rs 1,000 crore as taxes on the sale of its 34.8 per cent controlling stake to Tokyo-based Daiichi Sankyo for as much as Rs 19,720 crore ($4.6 billion), analysts said.
With the stock price dropping to below Rs 360, it will be difficult for the promoters to sell their stock through stock exchanges and avoid the provisions of tax. An off-market transaction would attract provisions of tax laws, analysts said.
A Ranbaxy spokesperson declined to comment on the tax provision and also the possible losses arising out of the US FDA’s move to ban drugs from the two facilities of the company.