FDA prohibits Ranbaxy’s Toansa, India facility from producing and distributing drugs for the U.S. market

Indian drugmaker Ranbaxy Laboratories Ltd faces long delays and high costs in launching big-selling generic drugs in the United States after products from a fourth plant were banned from entering its main market due to manufacturing violations.

The U.S. Food and Drug Administration's sanction is the latest in a series of regulatory rebukes for India's largest drugmaker by  revenue since Japan's Daiichi Sankyo Co Ltd took control of the company in 2008, and deals a further blow to the $12 billion Indian drug industry.

The FDA said Ranbaxy is prohibited from making and selling active pharmaceutical ingredients  from its facility in Toansa in the northern state of Punjab, "to prevent substandard quality products from reaching U.S. consumers."

The FDA ban on Ranbaxy's Toansa plant followed an inspection completed on January 11.

The U.S. regulator had previously barred products from the company's facilities in Paonta Sahib, Dewas and Mohali in India as part of a 2012 consent decree designed to ensure compliance with good manufacturing practices.

Indian drugmakers are among the world's biggest producers of cheap generic medicines. Demand for generics is on the rise as the United States and EU battle rising health-care costs and as more big-selling branded drugs go off-patent in western markets

But the rise in demand for generic drugs has led to closer regulatory scrutiny and sanctions imposed on top drugmakers including Ranbaxy and Wockhardt Ltd, which has been hit by import bans from both the FDA in the United States and MHRA -Britain's drug regulator.

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

Ranbaxy has been 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, a source with direct knowledge of the matter 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.

The FDA action could also delay the launch of a generic version of AstraZeneca Plc's blockbuster heartburn and ulcer pill Nexium in the United States, they said.

Staff at the Toansa facility were found to have re-tested raw materials and other ingredients after the items failed analytical testing "in order to produce acceptable findings," and did not report or investigate the failures, the FDA said.

The agency said the Toansa facility was now subject to certain terms of a consent decree entered against Ranbaxy in 2012. Under that agreement, Ranbaxy is prohibited from exporting active pharmaceutical ingredients made at the facility to the United States, including for drugs made at its Ohm facility.

Following FDA's findings, the World Health Organization as a precautionary measure suspended authorization of use of pharmaceutical ingredients manufactured by Ranbaxy Toansa.

On the other hand EU authorities have not taken any measures and they are still evaluating FDA's findings and information provided by Ranbaxy.