Ranbaxy to Invest $35m in Second Malaysian Facility

07-Aug-2013 - Last updated on 08-Aug-2013 at 11:45 GMT

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Sales and profit were down in Q2 for Ranbaxy but the firm has signed an agreement with the Malaysian Government to build a new manufacturing facility.

Indian drugmaker Ranbaxy, through its Malaysian subsidiary RMSB, has said in a filing with the Bombay Stock Exchange it will invest INR 2.13bn ($35m) into a new facility to manufacture dosage forms including tablets and capsules in Kedah, Malaysia.

“In addition to serving the local market, the new facility will also export products to the ASEAN markets, Middle East, Europe, Sri Lanka, China and other select nations,” said T. Jeyabalan Thangarajah, Managing Director of RMSB.

The Greenfield site has been allocated to the firm following the signing of a letter-of-offer agreement with Government owned industrial park Kulim Hi Tech Park (KHTP), and will employ over 200 people on a 15 acre area of land.

Malaysia has been focusing on attracting foreign pharma manufacturers – especially from India - in recent year by offering incentives and infrastructure, and this new site will be the second in the country for Ranbaxy.

Ranbaxy's sales in the region grew to INR 2.1bn ($34m), up 13% for the second quarter 2013.

Results and Remediation

For Q2, 2013, the Indian manufacturers reported a loss of INR 5.24bn ($86m) which fared better than the INR 5.8bn for the same period last year, though operational income was down 18% to INR 26.8bn.

The results also mentioned the INR 1.46bn Ranbaxy agreed to pay during the quarter as the first part of an INR 26.5bn ($500m) settlement the firm agreed to pay the US Food and Drug Administration (FDA) after pleading guilty in May of manufacturing violations and cover-ups.

The total amount was set aside in 2011 when the firm inked a consent decree in order to resolve an import ban imposed by the FDA on 30 products made at two of its plants in India.

Though the firm has said the implementation of the consent decree, signed in January 2012, progressed as planned for the period, Ranbaxy spokesperson Chuck Caprariello told us in May the firm did not know when it will be resolved and is dependent on further FDA inspections at the sites.