Ranbaxy gets FDA approval for Novartis's Diovan generic

WASHINGTON/MUMBAI Fri Jun 27, 2014 4:22pm IST

A general view of the office of Ranbaxy Laboratories is pictured at Gurgaon, on the outskirts of New Delhi, June 13, 2013. REUTERS/Adnan Abidi/Files

A general view of the office of Ranbaxy Laboratories is pictured at Gurgaon, on the outskirts of New Delhi, June 13, 2013.

Credit: Reuters/Adnan Abidi/Files

Related Topics

Stocks

   

WASHINGTON/MUMBAI (Reuters) - Ranbaxy Laboratories Ltd (RANB.NS) has received approval from the U.S. Food and Drug Administration (FDA) to launch a cheaper copy of Novartis AG's (NOVN.VX) blood pressure pill Diovan, bolstering its outlook after a raft of regulatory bans for poor production quality at its India facilities dented investor sentiment.

Ranbaxy, which is in the process of being acquired by drugmaker Sun Pharmaceutical Industries Ltd (SUN.NS) for $3.2 billion, will be the first rival drugmaker to launch a copy of Diovan in the United States and will be entitled to six months of exclusivity to sell it.

The drug, whose chemical name is valsartan, should add about $200 million to Ranbaxy's sales and $100 million to its profit after tax during the exclusive sale period, said Praful Bohra, a senior research analyst at Mumbai-based brokerage Nirmal Bang.

Swiss firm Novartis's once-best selling drug Diovan lost patent protection in September 2012, but it has been spared generic competition because Ranbaxy, which holds the right to launch the first generic of Diovan, was struggling with quality control issues at its manufacturing sites.

The FDA has banned all of Ranbaxy's India-based plants under a wider scrutiny of the country's $15 billion pharmaceutical industry, which is the largest supplier of medicines to the United States.

Novartis will continue to market both its branded and generic versions of Diovan, Dermot Doherty, a spokesman for the company in Zurich, said in statement.

Novartis earned about $100 million each month for the last 20 months without a generic rival of Diovan in the U.S. market, said Angel Broking's pharmaceutical analyst Sarabjit Kour Nangra.

Ranbaxy could not manufacture the pharmaceutical ingredient required for Diovan generic because of bans on its plants, but some analysts said the company could have sourced the raw materials from another domestic manufacturer.

A Ranbaxy spokesman did not respond to a request for comment on ingredient sourcing.

Sourcing the ingredient from a third-party would mean Ranbaxy would have to share a part of the drug's sales, according to analyst Nangra.

Ranbaxy's shares ended up 5.2 percent at 497.55 rupees, while Sun Pharma closed 4.1 percent higher at 660.85 rupees, pushing the healthcare sub-index to a record high. Novartis shares were down 0.3 percent at 80 francs.

FIRST TO FILE

The finished dose of the drug will be made at Ranbaxy’s New Jersey-based Ohm Labs unit, which is the only company-owned plant allowed to make drugs for the United States, Ranbaxy said on Friday.

Bill Winter, a vice president at Ohm Labs, said in a statement the Diovan generic would be launched "as soon as sufficient supplies are manufactured to meet the needs of the market."

Novartis in January forecast that total 2014 sales would grow at a low to mid-single digit rate, assuming a generic Diovan launch at the beginning of the second quarter of 2014.

The Ranbaxy statement did not say when the generic version of Diovan, which had global sales of $3.5 billion in 2013, will be launched. A Ranbaxy spokesman in India did not respond to a request for comment on launch plans.

Ranbaxy was also the first company to file with FDA seeking approval to launch generic versions of two other top-selling drugs - AstraZeneca Plc's (AZN.L) blockbuster heartburn drug Nexium and Roche's (ROG.VX) antiviral Valcyte.

These two drugs are pending final approval from the FDA.

Last month, Ranbaxy Chief Executive Arun Sawhney said he was "confident" that the company would be able to reap the benefits of these exclusive marketing opportunities.

He did not elaborate.

Reuters reported in March that Ranbaxy was in talks with at least two companies on sourcing ingredients for a generic version of Nexium.

"I think the Diovan generic approval is definitely a validation of their comment that they will be able to launch Valcyte and Nexium as well," Nirmal Bang's Bohra said.

(Additional reporting by Caroline Copley in Zurich and Abhishek Vishnoi in Mumbai; Editing by Sumeet Chatterjee and Matt Driskill)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Diplomacy

REUTERS SHOWCASE

Maruti Results

Maruti Results

Maruti Suzuki says profits helped by sentiment, not growth.  Full Article 

Tracking the Monsoon

Tracking the Monsoon

Monsoon turns patchy after revival.  Full Article 

ICICI Profit Up

ICICI Profit Up

ICICI Bank Q1 net profit up 17 percent, beats estimates.  Full Article 

Pharma Sector

Pharma Sector

FDA raises concern over drug production process at Cadila  Full Article 

Coal India

Coal India

Some Coal India mines may be run by foreign firms - minister  Full Article 

Fuel Prices

Fuel Prices

IOC to cut petrol prices by 1.5 pct from Friday  Read 

Economic Pulse

Economic Pulse

India's infrastructure output growth hits 9-month high in June  Full Article | Related Story 

Joint Bid

Joint Bid

ONGC, Oil India bid $1.5 bln for stake in Murphy Oil's Malaysia assets - sources  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage