Thursday, January 27, 2022
HomeUncategorizedRanbaxy slumps another 9pc on FDA ban

Ranbaxy slumps another 9pc on FDA ban

ranbaxyRanbaxy shares fell as much as 9 per cent on Monday as the selloff in the drugmaker intensified after the US Food and Drug Administration banned its fourth plant in India. On Friday, Rs. 3,437 crore was wiped out of Ranbaxy’s market cap as the stock plunged 19.43 per cent.

As of 10.36 a.m., Ranbaxy shares traded 5.7 per cent lower at Rs. 317.30 after earlier hitting a low of Rs. 306 on the BSE. The stock underperformed the broader Sensex, which traded down 1.5 per cent.

Global brokerage UBS retained its “sell’ call on the stock and cut its price target on the stock from Rs. 500 to Rs. 300. Downside risk continues to be high after FDA banned drugs from the Toansa facility in Punjab, UBS said, adding there is uncertainty around Ranbaxy’s first to file (FTF) drugs.

Ranbaxy has been reportedly planning to launch couple of high-yielding generic drugs in the United States, including a version of Novartis AG’s hypertension drug Diovan, with ingredients from Toansa. The FDA action could also delay the launch of a generic version of AstraZeneca Plc’s blockbuster heartburn and ulcer pill Nexium in the US.

Ranbaxy has been a major supplier of drugs, especially generics, to the United States and this latest enforcement action means most Ranbaxy products are now banned there.

The latest ban will hit Ranbaxy’s US business, its largest export market, bringing in roughly 40 per cent of total sales, by cutting the supply of raw ingredients for making drugs at its Ohm Laboratories plant in New Jersey, analysts said.

Ranbaxy may have to outsource the ingredients for making generic drugs, resulting in higher costs and delays and hurting its profit margins, analysts said.

Ranbaxy said it was disappointed with the FDA’s action and that it had voluntarily suspended shipments of products from the Toansa facility to the US market when it received the inspection findings.

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