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Ranbaxy gets FDA approval for Novartis's Diovan generic

A general view of the office of Ranbaxy Laboratories is pictured at Gurgaon, on the outskirts of New Delhi, June 13, 2013. REUTERS/Adnan Abidi/Files

By Toni Clarke and Zeba Siddiqui

WASHINGTON/MUMBAI (Reuters) - Ranbaxy Laboratories Ltd (RANB.NS) has received approval from the U.S. Food and Drug Administration (FDA) to launch a cheaper copy of Novartis AG's blood pressure pill Diovan, bolstering its outlook after a raft of regulatory bans for poor production quality at its India facilities dented investor sentiment.

Ranbaxy, which is in the process of being acquired by drugmaker Sun Pharmaceutical Industries Ltd (SUN.NS) for $3.2 billion, will be the first company to launch a copy of Diovan in the United States and will be entitled to six months of exclusivity to sell it.

The drug should add about $200 million to Ranbaxy's sales and $100 million to its profit after tax during the exclusive sale period, said Praful Bohra, a senior research analyst at Mumbai-based brokerage Nirmal Bang.

Swiss drugmaker Novartis lost its patent rights to its once best-selling Diovan in the United States at the end of 2012, but has avoided generic competition because of multiple production quality control problems at Ranbaxy.

All of Ranbaxy India-based plants have been barred by the FDA from exporting to the United States due to violations of its good manufacturing practices. Ohm Laboratories, a unit of Ranbaxy in New Jersey, is allowed to make drugs for its largest market.

The FDA over the past year has stepped up its scrutiny of drugmakers in India, which is the biggest supplier of medicines to the United States.

Worries about quality control problems in India's $15 billion drug industry came to the fore as multiple plants run by companies including Ranbaxy and Wockhardt (WCKH.NS) Ltd were barred from exporting to the United States.

Bill Winter, a vice president at New Jersey-based Ohm Labs, said in a statement the Diovan generic would be launched "as soon as sufficient supplies are manufactured to meet the needs of the market."

Ranbaxy's shares rose 5.4 percent to 498.40 rupees at 1:12 p.m., while Sun Pharma was trading 4.2 percent higher to 662.10 rupees, pushing the healthcare sub-index to a record high.


The Ranbaxy statement did not say when the generic version of Diovan, which had global sales of $3.5 billion in 2013, will be launched. A Ranbaxy spokesman in India did not respond to a request for comment.

Ranbaxy was also the first company to file with FDA seeking approval to launch generic versions of two other top-selling drugs - AstraZeneca Plc's (AZN.L) blockbuster heartburn drug Nexium and Roche's (ROG.VX) antiviral Valcyte.

These two drugs are pending final approval from the FDA.

Last month, Ranbaxy Chief Executive Arun Sawhney said he was "confident" that the company would be able to reap the benefits of these exclusive marketing opportunities.

He did not elaborate.

"I think the Diovan generic approval is definitely a validation of their comment that they will be able to launch Valcyte and Nexium as well," Nirmal Bang's Bohra said.

(Additional reporting by Abhishek Vishnoi in Mumbai; Editing by Sumeet Chatterjee)