Ranbaxy halts all API shipments from Toansa, Dewas plants

Ranbaxy said Tuesday that it has temporarily suspended shipments from its Toansa and Dewas active pharmaceutical ingredient (API) plants while it examines processes and controls at the Indian facilities. The company noted that the "precautionary measure" will allow it to better assess and review manufacturing processes and quality control systems at the sites.

In January, the FDA barred Ranbaxy from exporting products manufactured at the Toansa plant to the US after identifying manufacturing and quality control problems at the facility. The ban was the fourth from the agency to affect the company's Indian production sites after sanctions were placed on its Paonta Sahib and Dewas facilities in 2008 and an import alert was issued for its Mohali plant last year.

The Wall Street Journal, citing an unnamed employee at the Toansa plant, suggested that production stopped at the facility last week following a visit by officials from Daiichi Sankyo, which owns 64 percent of the Indian drugmaker. "They took samples for testing, to see if the quality-test process works," the employee said. A Daiichi Sankyo executive indicated last month that the Japanese company would "prepare drastic new measures" to fix quality control issues at Ranbaxy, including sending personnel to help resolve the problems.

IIFL Capital analyst Bino Pathiparamphil noted that Ranbaxy's decision to halt shipments from the Toansa and Dewas plants could be the "very early beginning" of an effort to overhaul its facilities. "They had to start one day. But taking something seriously is one thing and seeing something all the way through until it shows results is another thing," he said, adding "this is a two- or three-year process to put things right."

According to people close to the matter, Ranbaxy's suspensions at the Toansa and Dewas plants will affect supplies to key markets such as Europe and India. Analysts note that without in-house production of APIs, Ranbaxy will have to source ingredients from other companies for making generic drugs, which could increase costs. Angel Broking suggested that "since the company has voluntarily withdrawn its production, we believe that the company would have made alternative arrangements for the production of the withdrawn APIs." However, Prabhudas Lilladher analyst Surajit Pal indicated that this "will impact their margins."

Ranbaxy indicated that it has formed a quality and integrity committee "to provide oversight on the company’s manufacturing and quality operations, systems, organisation and integrity." The drugmaker said that it will resume shipments from the Toansa and Dewas plants once it was reassured about the processes and controls at the facilities.

In the wake of the quality control issues at Ranbaxy, as well as other Indian companies such as Wockhardt, FDA Commissioner Margaret Hamburg recently visited the country for discussions with regulators and drugmakers. The FDA and its Indian counterpart reached an agreement to collaborate and inform each other while inspecting drugmakers' manufacturing facilities. In addition, the US regulator said it would increase its presence in India, boosting the agency's number of investigators in the country from 12 to 19.

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