Ranitidine recall effect: GSK sells Karnataka plant to Hetero Labs for ₹180 cr

GlaxoSmithKline Pharmaceuticals Limited (GSK) said that its board of directors has approved the sale of its manufacturing facility at Vemgal (Karnataka) to Hetero Labs Limited for ₹180 crore.

This is a fallout of the global recall of heart-burn drug ranitidine, after the United States Food and Drug Administration flagged concerns over the presence of a possible carcinogenic contaminant. Following the voluntary recall in India in September 2019, the company stopped manufacturing and marketing the product.

The plant was a new one and in 2017-18, company top brass had indicated an investment of ₹1,000 crore in it, with capacity to employ over 200 people.

However, in May 2020, GSK had said that its third quarter and full year financial performance had been impacted by the voluntary global recall of ranitidine products including Zinetac in India. “We are currently exploring future options for the Vemgal facility including a potential sale of the site,” the company had then said.

Employees at the site had been given VRS last year, a person familiar with the development told Business Line, without divulging details. About 100 people are believed to have been given the VRS, and manufacturing had reportedly not commenced at the plant.

The transaction with Hetero includes the land, plant and machinery, assets, software and equipment, GSK said in a communication to the Bombay Stock Exchange.