Bad trip

In March this year, Swiss drug major Novartis announced a suspension of the marketing and sales of its bowel drug Zelnorm in the US over concerns that it may cause cardiovascular problems in some patients. This decision is expected to cut its annual sales by $600 million. Two months later, the US Food & Drug Administration (US FDA) issued a safety alert on GlaxoSmithKline’s blockbuster diabetes pill Avandia (rosiglitazone, which, last year, posted worldwide sales of £1.6 billion ($3.2 billion).

This came in the wake of reports that the drug may raise the risk of heart attack (the data on this remains inconclusive) and the company has revised its labeling in the US. Now it’s the turn of Indian major Ranbaxy. Last month, the Delhi-based pharma major pulled out 73 million tablets of its epilepsy drug Gabapentin from the US market. Reason for the “voluntary recall,” as the company puts it: “Presence of ‘related substances’ permitted in the products to be outside the approved specification limit.’’

Numbers in terms of how this will impact Ranbaxy are difficult to come by from the company and the officials are playing down the recall. Ranbaxy does not seem to see any room for alarm and the development is expected to have a marginal impact financially, if at all. The company stresses that this is a Class III recall, implying that it is a drug that is unlikely to cause any adverse health reaction and consumers are unlikely to fall sick after consumption.

A Class I recall is where it would be a dangerous or defective product that can have serious health problems or even death; a Class II is a product that can cause temporary health problems or only pose a slight threat.

In September 2005, when the company got USFDA approval to make and market the drug in the US, it had given a sense about the market by indicating that the total sales for Gabapentin were $2.2 billion with tablets of 600 and 800 mg strengths (the ones recalled) totaling $964 million (IMS-MAT: June 2005). But then, these would have to be seen more in terms of a potential market and considering that there would be other players in the space, analysts feel there may be reason to believe that the financial impact may not be significant. What it may have lost would be mainly on the expenses incurred in getting the drug to this stage and that would typically be on investments in R&D to make the formulation, on packaging and on marketing. Analysts feel that the damage to Ranbaxy would be on two fronts: A set back in the race against other generic companies; and a hit on its reputation. In addition, innovator companies will try to use this development to corroborate their argument that the quality of drugs manufactured in the country is suspect.

Also, a bigger damage, some analysts feel, could be on the regulatory side. For there could now be risks of possible delays in USFDA approvals going forward if the agency decides to get more tough with the company. But still the industry does not see a major reason for worry. “This is a common thing and not very unusual. There is more attention this time here probably because for the first time there is an Indian company involved,’’ says G.V. Prasad, Vice Chairman & CEO, Dr Reddy’s Laboratories.