After Ranbaxy, is Wockhardt in the line of fire?

After Ranbaxy, another major domestic drug maker Wockhardt may come under the scanner of the Indian drug regulator, reported Business Standard.

According to reports, the government may inspect facilities of Wockhardt, which are under US import alert.

Last month, the US Food and Drugs Administration (FDA) placed Wockhardt’s facilies in Waluj near Aurangabad on import alert, barring supply of various products from these facilities to the US.

Recently, theDrugs Controller General of India (DCGI) ordered an inspection into Ranbaxy’s Paonta Sahib and Dewas facilities, the two units that continue to be under US FDA’s import alert since 2008.

The regulator is also studying the recent observation passed by US agency on the company after Ranbaxy pleaded guilty of making fraudulent statements to US FDA to gain drug approvals.

Ranbaxy agreed to pay a penalty of $500 million to the US Department of Justice for its wrongdoings. Following the event, the DCGI is evaluating Ranbaxy’s operations in India and if there are any implications of it for Indian patients.

According to a Reuters report, India’s health ministry also suspended the sale and distribution of Dextyropropoxyphene, a pain-relieving drug manufatured by Wockhardt. Wockhardt makes this drug available in India under the brand name of Proxyvon, according to Macquarie.

Shares in Wockhardt Ltd fell 10 percent to their lowest close since August 2012.

Although the notification was made in India’s official gazette on 23 May, market players said it only got noticed and then circulated in markets on Tuesday.

Macquarie said in a note the sales suspension of the drug would impact Wockhardt’s earnings per share in fiscal 2014 by around 4 percent, given Proxyvon had annual sales of around 1.5 billion rupees.

The investment bank, however, added that correction in company’s stock price was overdone and it maintained its “outperform” rating and a target price of Rs 1,680.

With inputs from Reuters