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Shares of Ranbaxy Laboratories shot up 9.5 per cent in intraday trading on the BSE on Friday after the US Food and Drug Administration (USFDA) gave a clean chit to the company’s manufacturing facility in that country.
However, the Ranbaxy scrip pared most of its gains towards the end of the day as investors got into profit-booking mode. Finally, it closed at Rs 399.2, 1.54 per cent higher than the previous day’s close on the BSE. Around 16 lakh shares traded hands on the bourse.
On a statement posted on its Web site on Thursday night, Ranbaxy said: “Ohm of New Brunswick… announced that the Company has received a copy from the US Food and Drug Administration of its Establishment Inspection Report for its December 2012 inspection.”
FDA inspection
It may be recalled that Ranbaxy’s Ohm Laboratories (in the State of New Jersey) was inspected by USFDA towards the end of 2012. After this, Form 483 was issued to the company to notify it of conditions which seemed to have breached the US Food, Drug and Cosmetic Act and other laws. Ohm Laboratories manufactures solid dosage forms of analgesics, antibiotics, anti-diarrhoeal, laxatives, antacids and others, according to Ranbaxy’s Web site.
The EIR signifies that all issues and concerns of non-compliance observed by the USFDA in its December audits have been rectified satisfactorily. The move paves the way for Ranbaxy to continue supplying from this unit for the US market.
“While the development is positive and a huge relief for the company, we believe until the company is able to take its other three facilities out of the USFDA import alert, huge upsides are difficult in the near term, so we maintain our neutral stance on the stock,” said Sarabjit Kour Nangra, Sector Vice-President- Research, Angel Broking.
Ohm Labs is currently the only facility of Ranbaxy that caters to the US market as the company’s units at Paonta Sahib, Dewas and Mohali (all in India) are barred following deviations from compliance norms.
The US is a major market for Ranbaxy, accounting for more than 40 per cent of its total revenue last year.
> adith.charlie@thehindu.co.in
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