India's Ranbaxy Laboratories Ltd has received approval from the U.S. Food and Drug Administration (FDA) to launch a cheaper copy of Novartis AG's blood pressure pill Diovan, bolstering its outlook after a raft of regulatory bans for poor production quality at its India facilities dented investor sentiment.
Ranbaxy, which is in the process of being acquired by Indian drugmaker Sun Pharmaceutical Industries Ltd for $3.2 billion, will be the first rival drugmaker to launch a copy of Diovan in the United States and will be entitled to six months of exclusivity to sell it.
The drug, whose chemical name is valsartan, should add about $200 million to Ranbaxy's sales and $100 million to its profit after tax during the exclusive sale period, said Praful Bohra, a senior research analyst at Mumbai-based brokerage Nirmal Bang.
Swiss firm Novartis's once-best selling drug Diovan lost patent protection in September 2012, but it has been spared generic competition because Ranbaxy, which holds the right to launch the first generic of Diovan, was struggling with quality control issues at its manufacturing sites.
The FDA has banned all of Ranbaxy's India-based plants under a wider scrutiny of the country's $15 billion pharmaceutical industry, which is the largest supplier of medicines to the United States.
Novartis will continue to market both its branded and generic versions of Diovan, Dermot Doherty, a spokesman for the company in Zurich, said in statement.
Novartis earned about $100 million each month for the last 20 months without a generic rival of Diovan in the U.S. market, said Angel Broking's pharmaceutical analyst Sarabjit Kour Nangra.
Ranbaxy could not manufacture the pharmaceutical ingredient required for Diovan generic because of bans on its plants, but some analysts said the company could have sourced the raw materials from another domestic manufacturer.
The finished dose of the drug will be made at Ranbaxy’s New Jersey-based Ohm Labs unit, which is the only company-owned plant allowed to make drugs for the United States, Ranbaxy said on Friday.
Bill Winter, a vice president at Ohm Labs, said in a statement the Diovan generic would be launched "as soon as sufficient supplies are manufactured to meet the needs of the market."
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