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Ranbaxy Laboratories saw its shares plunge more than 10% on Wednesday as a consequence of the ban it got from the Food and Drug Administration (FDA).
Besides the halting on U.S. imports of its drugs, the Indian giant drug maker received two warning letters from the FDA about two labs that operate in India. The American administration apparently did not like the fact that the two labs did not meet safety and contamination standards. The two labs are Dewas and Paonta Sahib located in Madhya Pradesh and Uttar Pradesh respectively.
The FDA said it would block about 30 generic drugs from entering the United States as a consequence of the procedural violations in the Indian drug maker’s facilitates. Furthermore, any new drugs made at those plants won’t get the OK until the safety and contamination problems are solved.
The ban is a hard hit for Ranbaxy Laboratories. According to JPMorgan estimation, the Indian company’s sales in the United States accounted for about 15% of its total.
“Ranbaxy is very disappointed in the action taken by the U.S. FDA. The company has responded to each concern the FDA has raised during the past two years and had thought that progress was being made,” Ranbaxy said in a statement.
The FDA ban and its effects could also hurt Ranbaxy’s $4.6 billion acquisition deal with Japanese drug maker Daiichi Sankyo.
The list of generic drugs banned by the FDA includes: ciprofloxacin (antibiotic), metformin (diabetes treatment), pravastatin (cholesterol treatment) and loratadine (allergy drug). However, the FDA did not ban the ganciclovir, an immunodeficiency syndrome (AIDS) drug, due to a current lack.
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