Why Japanese Authorities Have Ordered Novartis To Cease Operations For Two Weeks?

Japanese authorities have ordered almost all of Novartis's Japanese operations to cease production for 15 days.

Regularity authorities in Japan have ordered Novartis AG (ADR) (NYSE:NVS) to cease operations in the country from March 5 till March 19, 2015. It is reported that the drugmaker failed to report side effects for some of its drugs within the time frame granted by Japanese Ministry of Health, Labour and Welfare. Japanese Ministry has also directed Novartis to halt sales of some over-the-counter (OTC) drugs.

The order directs the company to stop the production of drugs particularly of five vital drugs, as non-availability of the drugs may have adverse effects on a patient’s health. The report by the Wall Street Journal cites that the pharmaceutical giant failed to report side-effects for as many as 26 drugs, which resulted in 3,264 complicated health cases.

It was reported earlier regarding the possible suspension of operations for the Swiss drugmaker. The suspension is regarded by industry analysts to be the first of its kind in Japan.

Novartis Japan is reported to have accepted responsibility for its failure to comply with government directives earlier in the month, and issued a statement where the company apologized for “causing trouble and worry” to anyone who may have been affected by its failure to comply.

The company also said upon inspection of the government report in the matter that it does not see the need to modify safety information labels on its drugs. Although, the drugmaker says that it has enhanced employee training to certify adequate and timely safety reports submission in the future.

This is not the first run-in Novartis Japan has had with Japanese authorities. Earlier in 2014, the drugmaker was also involved in a scandal about its blood-pressure Drug, Diovan. Reports suggested that it had altered statistical data regarding the benefits of the drug to make it seem more effective than other similar drugs. The scandal resulted in an arrest of at least one Novartis employee, Nobuo Shirahashi. Novartis maintained no foul play in data regarding clinical trial data involving the drug. In April 2014, Novartis Japan was reported to have replaced its top tier management.

Recently, the therapeutic research company signs a $750 million dollar deal with Aduro Biotech. This will result in elaborating the company's drug portfolio. Aduro Biotech is one of the newest entrants in the pharmaceutical department after it announced its initial public offering of $86 millions, merely a few weeks ago only. It is expected to make promising advancements in the biotech industry.