Here's the good news: You probably don't own this company; it's not available on U.S. exchanges.
Here's the bad news: The company's actions could be far-reaching and affect many companies in the same industry.
The Food and Drug Administration claims that generic-drug maker Ranbaxy falsified data that it submitted to the agency. It's already banned the import of drugs from two of Ranbaxy's plants and now it won't review any new marketing applications from the plant where the violations took place.
That just doesn't seem like an extreme enough punishment.
The FDA has to be able to trust that the data it receives is accurate. The application for Eli Lilly's (NYSE:LLY) blood thinner, prasugrel, was reportedly so long that if you printed out all the pages it would be as high as the Empire State Building. The agency needs to be able to use its limited funds to figure out whether the data supports an approval, not whether it's accurate.
Approval of Johnson & Johnson (NYSE:JNJ) antibiotic ceftobiprole has been held up because the agency questioned some of the data that came out of the clinical trial sites. I think it's likely we'll see more questioning of data like this -- whether it's justified or not -- in the future. Unfortunately, once one drugmaker violates the FDA's trust, the agency is bound to waste time scrutinizing the accuracy of data from everybody, which will only further delay approvals.
Since Ranbaxy is based in India, the biggest ramifications could be for foreign generic-drug makers, such as Israel's Teva Pharmaceutical (NASDAQ:TEVA) and India's Dr. Reddy's Laboratories (NYSE:RDY). Between Ranbaxy's falsified data and Baxter's (NYSE:BAX) contaminated heparin that originated in China, the FDA is likely becoming continually wary of foreign manufacturing.
Thanks a lot, Ranbaxy.
Our Foolishness is far from generic:
- No one seems to like this bailout.
- $8.6 trillion was a drop in the bucket.
- A new all-time low! Now what?
