Ranbaxy Laboratories on Wednesday said that it has reached a settlement with United Stated Food and Drug Administration (USFDA) for resuming normal business in the US.

The company has separately set aside $500 million to cover any potential penalty from an investigation by the US Justice Department.

The new consent decree with the USFDA, which is subject to approval by the US District Court in Maryland, comes after the regulator banned the company in 2008 from importing more than 30 of its generic drugs because of violations of manufacturing practices at two plants — at Dewas and Paonta Sahib. If approved, the settlement will allow Ranbaxy to resume sales from the two plants in India.

But analysts expressed concern with the potential penalty as it will wipe out all the gains the company is expected to make from the launch of generic Lipitor. Market watchers expect Ranbaxy to earn $500 million from the sale of generic Lipitor, but the penalty will hurt the company's earnings.

Ranbaxy, however, said that the settlement with USFDA brings greater clarity around its US business. “These developments bring greater predictability to Ranbaxy's US operations and allow us to focus all of our efforts on bringing high quality products to market for the benefit of consumers,” said Mr Arun Sawhney, Ranbaxy CEO and Managing Director.

The company's shares closed 2.93 per cent higher at Rs 406 on the Bombay Stock Exchange.

The Daiichi Sankyo owned Indian drug maker has got positive rulings from the US authorities ever since the Japanese firm took a majority stake in 2008. Market observers said that this was an indication of the growing political closeness between Japan and the US. Also, Ranbaxy has gained from the strict compliance norms followed by the Japanese company. A fact recognised by the Ranbaxy CEO while announcing the new deal with the US regulator.

“Ranbaxy's new management team, and its new majority shareholder, Daiichi Sankyo, are committed to the utmost levels of professionalism and integrity, and to ensuring that all Ranbaxy facilities meet the high standards that patients, prescribers and the public expect from a leading global generic pharmaceutical company,” he said.

Mr Sawhney said that the resolution of the three-year old issue begins the next chapter in Ranbaxy's history. “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 and enhance the quality of our business and manufacturing processes,” he said.

> tkt@thehindu.co.in

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