* Sun Pharma plans to preserve Ranbaxy brand - executive
* Making India plants FDA-compliant top priority for Sun
* Fixing Ranbaxy is 'largest challenge we've had' - exec
* European regulator plans Ranbaxy plant inspection in June
(Adds fund manager comment, European regulator comments)
By Sumeet Chatterjee and Zeba Siddiqui
MUMBAI, April 9 India's Sun Pharmaceutical
Industries Ltd plans to begin phasing out sales of
generic drugs branded as Ranbaxy Laboratories Ltd
products in the United States, after completing a $3.2 billion
takeover of its loss-making rival by the year end, sources with
direct knowledge of the matter said.
Ranbaxy drugs sold in the United States will be gradually
rebranded as Sun Pharma treatments as part of a strategy to turn
around the company being bought from Japan's Daiichi Sankyo Ltd
. The brand is likely to continue to be present in other
markets, the sources said.
The sources declined to be named as they were not authorised
to speak to the media on the subject.
Uday Baldota, Sun Pharma's senior vice president of finance
and accounts, didn't comment directly when asked whether Sun
Pharma will phase out Ranbaxy-branded products in the United
States. "Overall Ranbaxy brand has a value," he said. "We will
find ways of using it and preserving it."
The plan to phase out the brand from the United States will
be part of a slew of changes at Ranbaxy, including an intense
lobbying push with the U.S. Food and Drug Administration (FDA)
to lift bans on imports from Ranbaxy's India plants over
production quality concerns, the sources said.
Sun Pharma, which has been the subject of comparatively
fewer regulatory actions in the past, on Monday agreed to buy
Ranbaxy in an all-share deal, betting it can fix the factory
quality glitches that plagued Daiichi Sankyo and got Ranbaxy's
India-made drugs barred from the United States. India's market
regulator is now taking a look at the deal, after shares in
Ranbaxy surged before it was announced, a senior source at the
regulator said on Wednesday.
Sun Pharma concedes the road to the recovery at Ranbaxy is
set to be long and challenging. The all-share acquisition will
create India's biggest and the world's fifth-biggest generic
drugmaker with combined sales estimated at $4.2 billion.
"(The Ranbaxy challenge) is quite big. In absolute size it
is the largest challenge that we've had," Baldota said. "It will
take time, it is not going to come easily, it will take a lot of
effort, but hopefully we should be able to help them resolve the
Some U.S. doctors are becoming concerned about the quality
of generic drugs supplied by Indian manufacturers following a
flurry of recalls and FDA import bans on companies such as
Ranbaxy and Wockhardt Ltd.
The broader issue of the quality of drugmaking has become a
major concern in the $14 billion pharmaceutical sector in India,
second only to Canada as a drug exporter to the U.S., where it
supplies about 40 percent of generic and over-the-counter drugs.
In a statement issued to Reuters on Wednesday, the European
Medicines Agency, the regional drug regulator, said an
inspection of Ranbaxy's Dewas plant, one of the two plants from
which the company voluntarily suspended shipments in February,
was planned for June.
With an eye on competing with bigger global rivals such as
Teva Pharmaceutical Industries Ltd and Sandoz, the
generic division of Novartis AG, Sun Pharma has said
making Ranbaxy's India plants FDA quality-compliant again is its
"There are definitely going to be challenges because Ranbaxy
has gone through a lot of pain from the FDA side," said Mahesh
Patil, a fund manager at Birla Sun Life Asset Management. "The
FDA issues and getting clearances will take its own time, but on
the operational side, the integration I think they should be
able to do in a year's time to a large extent."
Sun Pharma, the top Indian drugmaker by market value, could
invite the FDA and regulators from other major markets to visit
the four India factories of Ranbaxy after improving production
processes at these sites as a "confidence-building measure", one
of the sources said.
Getting the FDA bans lifted from the India plants of Ranbaxy
would help Sun Pharma benefit from Ranbaxy's new product
pipeline, including a generic version of AstraZeneca's
big-selling heartburn drug Nexium, which had global sales last
year of $3.87 billion and U.S. sales of $2.12 billion.
The changes to revive Ranbaxy, once the embodiment of the
rapid growth in the Indian generic drugs industry, are also
likely to include some management restructuring to boost
oversight of plants in India, the sources said.
"Sun (Pharma) will now have to do a series of things,
starting with building faith and trust with the FDA and making
some changes in the management to improve oversight," one of the
sources said. "It will be a series of measures to demonstrate
credibly that they are on the job."
(Reporting by Sumeet Chatterjee and Zeba Siddiqui; Editing by