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Analysts say Ranbaxy's move to suspend shipment positive, but late

E Kumar Sharma     February 25, 2014

Ranbaxy Laboratories has informed the Bombay Stock Exchange (BSE) that it "is currently examining processes and controls at all the company's Active Pharmaceutical Ingredients (API) Manufacturing and Quality units. This action has led to temporarily putting on hold shipments from the company's API facilities of the Toansa and Dewas Plants."

Analysts see this development as positive even if somewhat delayed.

According to the company "this voluntary decision was taken as a precautionary measure and out of abundant caution to better allow the company to assess and review the processes and controls."

These are proactive measures that the company has taken, particularly for the Dewas API, says Vivek Kumar, research analyst for pharma and lifesciences at SBICap Securities. "However, they could have done this earlier and is a little late in the day coming after over two years since the signing of the consent decree (an agreement with the US Food and Drug Administration) that it will improve procedures and policies with respect to the manufacturing practices," adds Kumar.

It is perhaps one reason why analysts don't expect the stock markets to be very upbeat about the development.

"This is a positive move but you cannot expect immediate results as it will be a long-drawn process and it will be sometime before the results start showing," says Kumar.

In its note to BSE, the company also indicated that "a committee of the Board has been constituted in February 2014 as the 'Quality & Integrity Committee'. The committee's objective is to help and assure good governance to all Ranbaxy stakeholders. Its primary role is to provide oversight on the company's manufacturing and quality operations, systems, organization and integrity."

A little after noon, the Ranbaxy stock on BSE was up 1.25 per cent and trading at Rs 368.


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