Clock ticks for Ranbaxy as Novartis continues to reap Diovan revenues


As Novartis celebrates another quarter of unexpected Diovan sales, another period of missed opportunity emerges for Ranbaxy. The Swiss drug maker today revealed sales of $835m in the third-quarter for the blood pressure pill – since its patent expired in the US in September last year the drug has generated $3.7bn.

On-going manufacturing problems have rendered Ranbaxy unable to capitalise on its valuable first-to-file status for Diovan generics, although the Indian company’s executives continue to maintain that they will eventually be able to meet the US regulator’s demands and make the most of their exclusivity period. But the clock is ticking, and another FDA import ban last month did nothing to reassure the Indian company’s investors that these issues are under control.

Sanctioned delay

Ranbaxy agreed a consent decree with the FDA almost two years ago, setting out what it had to do to bring conditions at its Indian plants back up to global standards, and allow imports into the US. On top of a $500m penalty, the decree also set out conditions under which the company could keep its first-to-file status on certain key drug applications. The company has never disclosed which drug applications they related to, but four have been closely watched – Lipitor, which has already happened, and first-to-file launches of Diovan, Nexium and Valcyte.

Although Ranbaxy’s problems have significantly delayed the entrance of copycat Diovan pills in the US, the regulator appears to have sanctioned this delay, to a point. Ranbaxy will lose its exclusivity unless it can prove its drug application is complete by a certain date; this date is unknown but is likely to fall in the first half of next year, and statements by the company have been taken to mean the exclusive launch will happen, eventually.

However, last month the FDA imposed an import alert on Ranbaxy’s new Mohali facility – knocking 30% off the company’s share price – a nasty surprise considering that the plant was only opened for business in 2012. The event sparked concerns that the company does not have its manufacturing issues under control, and that efforts implemented since the consent decree was signed by the FDA in are failing to have any impact.

Good news followed last week, when the regulator cleared Ranbaxy’s US plant, Ohm Labs, for US supply. Ohm is now the company’s only plant approved to supply in the US, and the hope is generic approvals can now be made from this facility. This news raised hopes that an exclusive launch of Diovan generics might be on the horizon.

Fearing the worst

Hurdles remain, however, says Chirag Talati, an analyst at Espirito Santo. “The technology transfer [to the Ohm plant] has been successful, and now they are filing for a site transfer. So I think this quarter will pass them by,” he said.

Novartis also said today it does not expect generics to launch this year, but on a conference call executives said this estimate was a guidance issue, rather than based on any competitive intelligence.

Ranbaxy desperately needs to win approval for this generic. Not only to bolster its finances, which have been severely crimped by the cost of adhering to the consent decree, but also to convince investors its long running issues are under control.

It just managed to hang on to its Lipitor exclusivity – but only by negotiating a failsafe API supply agreement with Teva that cost it 40% of the profits from that launch. The Diovan launch might be late, but it needs to happen soon, or investors will begin to fear the worst.

To contact the writer of this story email Amy Brown in London at or follow @AmyEPVantage on Twitter

Share This Article