Macquarie downgrades Ranbaxy to underperform

Macquarie Securities has downgraded Ranbaxy Laboratories to underperform and cut its price target by 45% to Rs 146 after the US FDA invoked its Application Integrity Policy (AIP) against the company’s Ponta Sahib facility. "The AIP is invoked when a company’s actions raise significant questions about the integrity of data in drug applications. We believe the stock will further de-rate on the back of this news," the investment bank said in a report. Macquarie believes the FDA move could put some of the company’s First-to-File (FTF) products, which are associated to the facility, at risk. "There are a few FTF original applications are from the Ponta Sahib site and if data is found to be not reliable, a fresh application would be required, thus putting the FTF status on those products at risk," the investment bank said. Macquarie thinks that these issues will stretch past this year and impact the company’s sales in 2010. "We cut our FY09E and FY10E EPS by 15% & 13.5% respectively to account for further weakening of US business and increase in R&D expense." it added. At 12:35 pm Wednesday, Ranaxy shares were up 1% at Rs159. Source: ET