By Zeba Siddiqui and Aditya Kalra
MUMBAI/NEW DELHI (Reuters) - Pfizer Inc (N:PFE) and Abbott Laboratories (N:ABT) on Monday said they would comply with a ban on a popular cough syrup in India after it was added to a local list of prohibited drugs, sending shares in the U.S. firms' Indian subsidiaries tumbling.
Pfizer's Corex-brand syrup and Abbott's identical Phensedyl contain the narcotic codeine. That brought them to the attention of authorities combating addiction and smuggling, who had been privately pressuring the drugmakers to better police supply chains, Reuters reported last year.
"We are happy that this will end the misuse of the medicine," said Akun Sabharwal, drugs controller for the southern state of Telangana, that last year detected an "illegal diversion" of Phensedyl worth about $8.5 million.
Shares of Pfizer Ltd (NS:PFIZ) fell as much as 8 percent after the drugmaker said it stopped selling its version of the medicine. Shares of Abbott India Ltd (NS:ABOT) fell as much as 3 percent after the firm said it would comply with the ban.
INDUSTRY SALES HIT
The medicine - a combination of chlorpheniramine maleate and codeine syrup - was among 344 fixed-dose combination drugs that Indian regulators banned at the weekend after a panel of experts found they lacked "therapeutic justification".
Market researcher AIOCD AWACS estimated the total ban could cut sales in the local pharmaceutical industry by up to $522 million, with Pfizer and Abbott among the worst hit.
Pfizer said Corex sales totaled about $26 million in the nine months through December. Abbott's Phensedyl commands around a third of the local cough syrup market and makes up over 3 percent of the company's $1 billion in Indian revenue.
Pfizer said of the ban that it was "exploring all possible options."
OPPI, a lobby group for multinational drugmakers, said regulators had used "a very broad brush" when imposing the ban. The Indian Pharmaceutical Alliance, which represents Indian drugmakers, said review process was not transparent.
Health ministry bureaucrat K.L. Sharma told Reuters on Monday that he disagreed, saying, "We are not prepared to tolerate anything that will affect patients."
COURT BATTLE
The sale of combination drugs requires the approval of central government. However, the 344 listed at the weekend entered the market based only on local approval.
Regulators have made intermittent efforts to prevent drugs reaching the market without central government clearance. They issued an order in 2007 requiring states to recall about 300 combination drugs. Drugmakers challenged the order in court, which put it on hold. (http://reut.rs/1J9azFo)
In 2014, regulators set up a review of combination drugs that had not received central government approval. Regulators have assessed over 6,000 such drugs and asked makers to prove their safety and efficacy.
While it has banned 344, the review process is ongoing, the health ministry's Sharma said.