New Delhi: Drug maker Ranbaxy Laboratories on Wednesday said it has reached an agreement with the US health regulator to lift a ban on import of drugs from its certain factories in India, a move which could see the drugmaker pay up to USD 500 million as fine to the American authorities. (Agencies)
As an immediate after effect of the intended payout of USD 500 million, the firm's parent, Daiichi Sankyo revised its earnings forecast, and salary cuts for its directors.
In a statement, the Gurgaon-based firm said it has "signed a consent decree" with the US Food and Drug Administration (USFDA).
"Ranbaxy has committed to further strengthen procedures and policies to ensure data integrity and to comply with current good manufacturing practices," the company said.
The consent decree is subject to approval by the United States District Court for the District of Maryland, it added.
The company also said "it intends to make a provision of USD 500 million (nearly Rs 2,640 crore) in connection with the investigation by the US Department of Justice, which the company believes will be sufficient to resolve all potential civil and criminal liability."
In 2008, the USFDA had banned 30 generic drugs produced by Ranbaxy at its Dewas (Madhya Pradesh) and Paonta Sahib and Batamandi unit in Himachal Pradesh, citing gross violation of approved manufacturing norms.
In the same year, the US Department of Justice had moved a motion against the company in a local court alleging forgery of documents and fraudulent practice.
Commenting on the development, Ranbaxy CEO and Managing Director Arun Sawhney said: "While we were disappointed by the conduct that led to the FDA's investigation, we are proud of the systematic corrective steps we have taken to upgrade and enhance the quality of our business and manufacturing processes."
Meanwhile, in a statement Daiichi Sankyo said it has revised downward its annual earnings forecasts taking into account the USD 500 million provision indicated by Ranbaxy.
"Following Ranbaxy's provision, the company has incorporated an extraordinary loss of 37.5 billion Yen into its revised annual forecasts," it said.
Factoring in the minority interests of Ranbaxy, net income has been downwardly revised by 24 billion Yen to 26 billion yen, it added.
Further, in response to this downward revision of its earnings forecasts, the company's board has decided to return part of their monthly remuneration, it said.
As per the statement, "the company's board has decided to return part of their monthly remuneration" which stands at 30 percent for Representative Directors for six months and 10 percent or five percent for Directors for six months. Daiichi Sankyo said the revised earnings forecasts do not include contributions from Ranbaxy's Atorvastatin launch in the US.
The company, however, did not change its forecast for its fiscal year-end dividend of 30 yen per share.
Earlier this month, the USFDA had allowed Ranbaxy to launch its generic version of Lipitor, a cholesterol-lowering drug under the condition that it was manufactured at the plant of its US-based wholly-owned subsidiary, Ohm Laboratories.
Ranbaxy, is one of two companies entitled to sell generic Lipitor, the world's largest selling drug, for six months after its US patent expired on November 30.
Ranbaxy became a part of the Daiichi Sankyo Group in 2008 after Japan's third largest drug-maker bought a majority stake for Rs 22,000 crore.
Shares of Ranbaxy on Wednesday closed at Rs 406.95 apiece on the BSE, up 2.93 percent from their previous close.
New Delhi: Drug maker Ranbaxy Laboratories on Wednesday said it has reached an agreement with the US health regulator to lift a ban on import of drugs from its certain factories in India, a move which could see the drugmaker pay up to USD 500 million as fine to the American authorities.