Ranbaxy Labs to pay up to $500-mn fine in settlement with US FDA,forecast cut

Brokerage firms and analysts were quick to state that the fine is on the higher side for the settlement that would lift the US regulators ban on import of drugs from certain factories of the firm in India

Ranbaxy Laboratories,which is majority owned by Japans Daiichi Sankyo,on Wednesday provided for a hefty $500-million fine to settle its long-running dispute with the US Food and Drug Administration (FDA).

The fine,analysts said,would cut into the benefits it would have gained from the launch of the generic version of Lipitor,the globally popular anti-cholesterol drug,for which it had just got the approval from the FDA. As an immediate after-effect,parent firm Daiichi Sankyo revised its earnings forecast,and announced salary cuts for its directors.

Brokerage firms and analysts were quick to state that the fine is on the higher side for the settlement that would lift the US regulators ban on import of drugs from certain factories of the firm in India. The announcement of the news on Wednesday morning saw volatile trading in the companys shares. On the BSE it hit a low of Rs 381.45 but finally managed to close up 3 per cent at Rs 406.95.

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In 2008,the FDA had banned 30 generic drugs produced by Ranbaxy at its Dewas (MP) and Paonta Sahib and Batamandi units in HP,citing violations of manufacturing norms. Later,the US department of justice had moved a motion against it in a local court alleging forgery and fraudulent practice.

The company statement said: Ranbaxy has committed to further strengthen procedures and policies to ensure data integrity and to comply with current good manufacturing practices. The consent decree is subject to approval by the US district court for the district of Maryland,it added. It also said it intends to make a provision of $500 million (nearly Rs 2,640 crore) in connection with the investigation by the US department of justice,which the company believes will be sufficient to resolve all potential civil and criminal liability.