US FDA refuses to approve Ranbaxy's Flomax

India's largest drugmaker by sales Ranbaxy's US Food and Drug Administration (FDA) woes continue. The company was expected to launch a drug called Flomax in the US on Tuesday, which it could not after the FDA refused a final approval.

How big a hit is this to Ranbaxy's immediate and medium term valuations?

Sentiment was hit and the stock was down 6 per cent at one point in the trading day and all that because Ranbaxy could not launch generic Flomax in the US.

Ranbaxy failed to get a regulatory nod for launching a cheaper version of Astellas Pharma's Flomax, a drug used to treat an enlarged prostate gland.

Ranbaxy had got tentative approval from the USFDA in 2007 to launch the generic version of Flomax. It was supposed to enter the US market on March 2, 2010, 8 weeks before the patent expires in the US, thereby enjoying 8 weeks of exclusive sales of the drug.

Till last week, Ranbaxy was confident of the drug's US launch.

On February 25, 2010 Atul Sobti, CEO and MD of Ranbaxy said, "We don’t go into specific products on normal, broadly on the First-To-File. We've always maintained that we would do our best to derive the best value from our First-To-File and that’s what we would stay with on."

Now there are concerns within the analyst community, especially because the 8-week window would have translated into sales of between $50 to $60 million.

Raj Majumder, CEO of iMetanoia Financial Services, said, "Need to have some conviction in terms of the scale-up opportunity that there is. The generics market is going to get increasingly competitive."

Well, this is the second time that Ranbaxy has lost out on launching its products on time due to USFDA issues. Last year it was Imitrex and now Flomax, clearly an over $2 billion dollar lost opportunity.

With players such as Impax Labs launching their versions of Flomax ahead of Ranbaxy, chances of this drug providing an earnings boost to Ranbaxy has faded.