Ranbaxy Laboratories Ltd has received the nod to launch a cheaper version of Novartis AG's blood pressure and heart attack treatment pill Diovan, from US Food and Drug Administration (FDA), amid acquisition process by Sunpharma for $4 billion.
This agreement has come after regulatory bans for poor production quality and complaints. Diovan, also known as Valsartan, is used to treat chronic heart failure, hypertension or to reduce risk of death after heart attack.
The company will be the first to exclusively sell Novartis' Diovan copy in the first six months.
"The drug should add about $200 million to Ranbaxy's sales and $100 million to its profit after tax during the exclusive sale period," Reuters quoted Praful Bohra, a senior research analyst at Mumbai-based brokerage Nirmal Baug.
However, New Jersey-based Ohm Laboratories, which is a subsidiary of Ranbaxy, received approval from FDA to manufacture 40 mg, 80 mg, 160 mg and 320 mg tablet on an exclusive basis.
Ohm Laboratories manufactures, promotes and distributes Ranbaxy's drugs in the US healthcare sector. Swiss drug maker Novartis lost its patent rights in 2012 but has managed well in the market due to multiple production quality controls.
All of India-based Ranbaxy drugs have been prohibited by FDA from exporting to United States due to its violation in manufacturing process. But its subsidiary Ohm Laboratories Inc. is allowed to manufacture drugs in USA.
"For the U.S. healthcare system, Valsartan adds to the growing portfolio of generic medications which have played such an integral role in helping to alleviate the burdens of rising costs of treatment," Bill Winter, Vice President of Sales and distribution said in a press release.
On Friday, stock price of Ranbaxy recorded 497.15 with a surge of 25.40 and a 5.38 percent change. While Sun Pharmaceuticals Industries Ltd. stock price was traded as 660.85 with profit of 25.70 and 4.05 percent change.