The Supreme Court on Friday directed drug manufacturer Ranbaxy Laboratories to respond to a public interest litigation seeking a probe by the Central Bureau of Investigation (CBI) for allegedly supplying adulterated drugs in the country. The apex court also asked the government to reply to the plea that sought the court's direction for cancellation of the drug major's licence.
In a notice to the pharmaceutical company and the government, a bench headed by Chief Justice P Sathasivam agreed to examine the allegations and sought their response within four weeks.
The bench, however, declined to pass any interim order restraining the drug maker from manufacturing drugs. The court was hearing a PIL filed by an advocate M L Sharma who contended that "Ranbaxy was fined $500 million by the US Food and Drug Administration (USFDA) for making and selling adulterated drugs" and sought a CBI probe against the drug maker.
Referring to the legal battle faced by the company in the US earlier, the petitioner said Indian authorities have failed to regulate the marketing of adulterated drugs. "It is a clear case of Ranbaxy operating hand- in-glove with the drug controller of India who did not prohibit Ranbaxy from selling defective drugs." "It is a serious threat to the life of the citizens who is not only paying heavy money for Ranbaxy's generic version of cholesterol lowering /heart disease drug but also losing their life and health due to non-effective material in it," the PIL said.
Sharma also sought sealing of all its manufacturing units which include the Paonta Sahib in Himachal Pradesh and Dewas in Madhya Pradesh. He alleged that despite Ranbaxy pleading guilty to supplying adulterated drugs in the US and it being fined such a huge amount, the Centre has not taken any action to prohibit or ban the drugs made by the company.
He also sought action against Indian drug regulator, Central Drug Standards Control Organisation (CDSCO), for permitting Ranbaxy to sell drugs in India, especially in the wake of the results of the USFDA probe against the company.
Responding to dna queries, a Ranbaxy spokesperson said: "Ranbaxy has not yet received any notice to from the Supreme Court. If the company receives a notice, it will respond appropriately to the observations. Ranbaxy is compliant with all the requirements under Indian law and maintains that all the drugs sold by the company in the Indian market are safe and effective."
Analysts tracking the sector are of the view that SC's involvement increases the seriousness of the matter but how will the development impact company's business operations is something that is very difficult to say at this stage. "As of now there is no impact on the company's business," said Sarabjit Kour Nangra, vice president (research). The product in question is a generic Atorvastatin manufactured by Ranbaxy under the brand name Storvas and is prescribed to help lower cholesterol and triglyceride (fat) levels in the blood. Analysts familiar with the product said the drug contributed close to Rs 76 crore in revenues for Ranbaxy. "We feel Indian regulatory agencies viz. Central Drug Standards Control Organisation (CDSCO) and CBI will have to act against the company. Moreover, it has to be seen how Ranbaxy replies to the Supreme Court notice. We expect the share price to remain under pressure till the clarity emerges on the issue," Ranjit Kapadia, senior vice president, Centrum Broking that has a `sell' on the stock.
Industry experts are unsure about the outcome of this development as something like this is happening for the very first time in the Indian pharmaceutical space and Ranbaxy in particular. "Cancellation of the company's licence for issues with one drug is very far-fetched. The regulators could stop the company from manufacturing the drug, but don't think they can cancel the licence," said an analyst.
Ranbaxy is expected to be on the receiving end considering there are a couple of strong incidents that will go against the company's defence. "Glass particles were found in the medicine and Ranbaxy has pleaded guilty while also agreeing to pay $500 million in penalty to the USFDA," the analyst said. "After all this, the company had last week recalled over 64,000 bottles of generic Lipitor from the US market citing dose mix-up. These incidents further weaken Ranbaxy's stance and will go against it," said a pharma analyst.