Says has enough resources to comply; payout higher than analysts’ estimates.
India’s leading drug maker, Ranbaxy, has settled its three-year legal dispute with the US food and drugs regulator by agreeing to pay a $500 million penalty (nearly Rs 2,640 crore). The US authorities will drop criminal charges against the company for obtaining marketing approval through alleged falsification of data.
The company was also accused of violating several manufacturing norms in two of its domestic manufacturing facilities. Ranbaxy on Wednesday said it had signed a consent decree with the US Food and Drugs Administration (FDA), which would eventually lead to the lifting of an FDA ban on production and export of 30 medicines from the two manufacturing centres.
The penalty provision is meant to settle all criminal charges framed against the company by the US Department of Justice. The company management clarified in an investor conference that it had adequate resources to fund the penalty and there was no plan to raise debt for it.
Ranbaxy was bullish on revenue expectations from the sale of its version of the world’s largest selling anti-cholesterol drug, Lipitor, during the ongoing six-month exclusive marketing opportunity period in the US. Ranbaxy stocks closed 2.93 per cent up at Rs 406.95 a share on the Bombay Stock Exchange on Wednesday.
Analysts said the penalty for the comprehensive settlement was much above their estimates and would erase much of the company’s 2012 earnings from the US. “The amount is higher than estimated ($250 million) and would negate the expected cash flow of $450 million from the exclusive marketing opportunities in 2012,” an investor note from PINC Research stated.
In a statement, Ranbaxy CEO and Managing Director Arun Sawhney said, “While we were disappointed by the conduct that led to the FDA’s investigation, we are proud of the systematic corrective steps we have taken to upgrade the quality of our business and manufacturing processes.”