Ranbaxy faces fresh US penalty of Rs242 cr over Toansa-made API

The American woes of Ranbaxy Laboratories continue, with reports today saying that it will have to pay a Rs242 crore fine to the US authorities due to violations found at its active pharmaceutical iIngredient (API) manufacturing factory in Toansa, Punjab.

The facility is currently banned from supplying products to the American market.

This will be the second such hefty penalty for the company, which paid $500 million to the US department of justice (DoJ) in May 2013, after it pleaded guilty to felony charges related to drug safety and misrepresenting data to gain faster approvals. This comprised $150 milllion for a criminal charge and forfeiture and $350 million in payments for civil claims (See: Ranbaxy fined $500 mn by US regulator over drug safety lapses).

The latest penalty has also been imposed by the DoJ and is specifically related to the violations found at Toansa.

Earlier this year, the unit was issued an administrative summons by the US attorney for the district of New Jersey. Sources said this was triggered through an investigation into alleged fraud and violation of manufacturing norms (Ranbaxy hit afresh by FDA; all its India-made products banned). The company was asked to produce certain documents relating to issues previously raised by the FDA with respect to the Toansa facility.

In January, the US Food and Drug Administration (US FDA) had barred supplies from the API plant to America. This was after inspecting authorities found severe lapses in norms and procedures, including presence of flies in the sample storage room, un-calibrated instruments in the laboratory and non-adherence to sample analysis procedures.

The Ranbaxy management said it had initiated a third-party investigation to find the guilty, following the US FDA enforcement on the Toansa factory.

Currently, all four factories of Ranbaxy in India, at Poanta Sahib (Himachal), Dewas (Madhya Pradesh), Mohali (Punjab) and Toansa are all barred from supplying products to the US market. All these plants are also part of an ongoing consent decree signed by the company to take corrective measures, as prescribed by the regulator (US FDA raises concerns over a fourth Ranbaxy facility).

The latest penalty is likely to have a significant impact on Ranbaxy's financials, already under pressure following the US ban on its domestic manufacturing facilities. Consolidated sales in April-June were Rs2,372 crore as against Rs2,584 crore in the corresponding period a year earlier. Sales from the North American market dipped 11 per cent over a year to Rs760 crore. Of this, the US market contributed Rs700 crore.