Ranbaxy faces new US regulation woes

Updated 22 September 2013

Ranbaxy faces new US regulation woes

MUMBAI: Shares in Indian generic drugs giant Ranbaxy Laboratories crashed by as much as 35 percent on Monday after the US Food and Drug Administration suspended imports from one of its factories.
The FDA issued an alert recently against the factory at Mohali in the northern state of Punjab, spelling more bad news for Ranbaxy which is struggling to live down a nearly decade-long history of US-led regulatory action.
Ranbaxy, one of the world’s biggest generic drugs makers, slid 34.99 percent to a day’s low of 297.25 rupees on the Bombay Stock Exchange in early trading.
By the end of the day, some brokerage firms had downgraded the stock, citing concerns over the future of the Mohali plant.
Shares closed down 30.27 percent at 318.85 rupees.
A spokesman for Ranbaxy, which was bought by Japan’s Daiichi Sankyo group in 2008, said “the company has so far not received any communication from the US FDA” and it was seeking information.
The FDA website did not explain the reasons for the “import alert.”
In May, Ranbaxy pleaded guilty to US charges of selling adulterated antibiotic, acne, epilepsy and other drugs and agreed to a record $500 million fine. The episode was a huge blow to its image.
The US fraud, uncovered over eight years, was exposed by a whistle-blowing ex-employee who said Ranbaxy created “a complicated trail of falsified records and dangerous manufacturing practices.”
Ranbaxy imported adulterated batches of drugs made in its Paonta Sahib facility near the Indian city of Chandigarh, which FDA inspectors said had poor record-keeping and inadequate testing for the stability of the drugs over time.
The company also admitted making false and fraudulent statements to the FDA in 2006-2007 about stability tests on several other export drugs.
The Paonta Sahib facility and another at Dewas in central India were blacklisted from producing drugs for the US market.
Ranbaxy is not alone in facing scrutiny from global regulators because of problems at its factories.
In July Britain’s health care regulator recalled 16 drugs from Indian pharmaceutical firm Wockhardt after finding deficiencies at one of its plants in western India.
“The import alert could be a huge setback for Ranbaxy Labs,” said Sarabjit Nangra, pharma analyst with Mumbai’s Angel Broking, adding that import alerts can take months to resolve.
Ranbaxy will for now have to rely on its New Jersey-based Ohm Labs to service all its US business, Nangra said.
Sriram Rathi of Anand Rathi Research, which downgraded the Ranbaxy stock from a “buy” to “sell” rating after the alert, said there could also be delays in new product launches.
The US is the world’s biggest drugs market and accounts for about 40 percent of Ranbaxy’s revenues.
India’s government has been forced to defend the country’s lucrative generic drug industry, which accounts for nearly $15 billion in annual exports.
The country has built a reputation as the “pharmacy to the world” for its production of life-saving generic versions of medicines for poor nations that cost a fraction of those with brand names.


Gulf Marine CEO quits after review sparks profit warning

Updated 26 min 37 sec ago

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.