Ranbaxy Laboratories tumbles 7 per cent on consent decree in US court

Share prices of Ranbaxy Laboratories tumbled nearly 7 per cent after a consent decree was filed in a United States court that requires the drug firm to make fundamental changes at its plants in the US and India.

The US Justice Department filed a "ground-breaking" consent decree in court on Thursday, mandating Indian drug-maker Ranbaxy to adhere to US manufacturing standards and ensure integrity of data at its plants in the US and India.

Reacting to the development, the stock of the company opened on a weak note on the BSE and then plunged nearly 7 per cent to close the day at Rs 443.75, down 6.62 per cent.

Similar movement was seen on the National Stock Exchange where, the scrip tanked 6.45 per cent to close at a low of Rs 443.90.

"The stock reacted to the consent decree that was filed in the United States. The judgement is negative and the slump in the counter is a knee jerk reaction to the development," CNI Research Head Kishor Ostwal said.

The consent decree requires Ranbaxy to hire an outside expert to conduct a thorough internal review at the affected facilities, withdraw any applications found to contain false data, set up a separate office of data reliability within Ranbaxy and hire an outside auditor to audit the affected facilities in the future, the Justice Department said.

These are part of a wide range of actions to correct its violations and ensure that they do not happen again, it added.

"Today's announcement is the next step in the process of finalising our agreement with the FDA to resolve this legacy issue," Ranbaxy CEO and Managing Director Arun Sawhney said in a statement on Thursday.