It's not until you read the Indian press that it dawns on you what a total disaster Ranbaxy is -- and by extension its deal to supply AstraZeneca with a Nexium ingredient.
BNET noted in March that Ranbaxy was accused of submitting fake data to the FDA on several drugs (and that, amazingly, the FDA has continued to approve Ranbaxy drugs in this country). That's just the tip of the iceberg.
A year ago, things were looking rosy for Ranbaxy. The company had just been bought out for $4.6 billion by Japan's Daiichi Sankyo. About 35 percent of that sum went to the family of Malvinder Singh (pictured), Ranbaxy's chairman. Since then, DS's stake has lost lost 2/3 of its value, and the company posted a full-year loss.
Why? Because the FDA's investigation is threatening to unravel huge chunks of the Ranbaxy generics empire. Business Week:
Having raided Ranbaxy offices in New Jersey in February 2007, the FDA had slowly built a case alleging that Ranbaxy sold either fake or adulterated versions of an HIV drug to patients in Africa, plus unrelated allegations about generics it sold in the U.S. Since then, the investigation has widened, with drug applications from two Ranbaxy production site being banned, details emerging of safety and compliance issues at other Ranbaxy plants, including potentially lying about expiry dates of drugs. Ranbaxy's answer was that it was innocent of all that the FDA alleged and was cooperating. It hired Rudy Giuliani to help make its case in the US.The company is now working on a "corrective action plan" with the FDA after more than 30 of its meds were banned.
Separately, Ranbaxy had launched a patent challenge on Nexium. To settle the challenge, AZ agreed to allow Ranbaxy to become its supplier of esomeprazole magnesium, an ingredient in Nexium. But, as this guy likes to say, when you marry the devil's daughter don't be surprised if your father-in-law comes to visit. Ranbaxy missed a deadline this month to begin supplying AZ with its drug. That missed deadline came after AZ inspected Ranbaxy's factories for itself. The delay may cost Ranbaxy $50 million in revenue.
Unsurprisingly, Singh resigned and was replaced by new CEO Atul Sobti (pictured). He has his work cut out for him. After three meetings with the FDA this year, he has still more scheduled.World Economic Forum, CC, and Ranbaxy.