US FDA flags issues at Sun Pharma’s Halol plant

Mumbai: Sun Pharmaceutical Industries Ltd, India’s largest drug maker, on Friday said the US Food and Drug Administration (FDA) had made three observations after inspecting its factory at Halol in Gujarat, for failing to meet good manufacturing practice standards.

“The US FDA conducted a Good Manufacturing Practices (GMP) inspection of Sun Pharmaceuticals Industries Ltd’s Halol facility. At the conclusion of the inspection, the agency issued a Form 483 with three observations,” the drugmaker said in a regulatory filing. The inspection was conducted between 12 February and 23 February.

The shares ended 5.17% higher to close at Rs570.20 on the BSE on 23 February.

Sun Pharma’s US supplies were hit over the past year after the US FDA found violations of manufacturing practices at the company’s Halol manufacturing unit. US FDA conducted its first inspection of the facility in 2014 and another in December 2015. The company was given a warning letter with six observations, preventing it from making fresh filings of new drug applications.

In November-December 2016, Sun Pharma’s Halol plant was re- inspected and the US FDA issued Form 483 with nine observations. The FDA inspectors found the drugmaker’s testing programmes inadequate and said the company had failed to report potential contamination issues on time.

As per the US health regulator, observations are made in Form 483 when the investigators feel conditions or practices in a facility are such that products may become adulterated or could be injurious to health.

The facility at Halol, one of Sun Pharma’s biggest units, holds the key to its US formulation business. Sun Pharma gets about half of its revenue from the US market and the Halol unit contributes a majority of its drug filings.

Barred from new drug filings in the American market, the company’s US business has been severely impacted in last couple of years due to the US FDA’s observations on Halol.

Resolution of concerns at the Halol unit is therefore critical for the company’s US business. Sun Pharma has been struggling to fix quality control problems at the facility. Clearance from the FDA will unlock several complex generic filings and allow the company to bolster existing products.

“The company remains committed to working closely with the US FDA and continues to enhance its Good Manufacturing Practices compliance on an ongoing basis. The company is committed to addressing these observations and will submit a reply to the Food and Drug Administration within 15 days,” it said in the exchange filing.

Centrum Broking analyst Ranjit Kapadia said though the number of observations have come down to three from nine, it didn’t make any difference. “We still need details on these three observations. How serious they are before making any further comments. It is not known whether these observations are the same as earlier or new observations. The number of observations going down doesn’t matter.”

Purvi Shah, research analyst at Sharekhan said, “We view the development as a sentimentally positive read-thru for Sun Pharma and Sparc, as they have got only 3 observations as compared to earlier 9 observations in 2016-17 re-inspections. Closure of these observations with positive clearance from US FDA will remove long standing overhang on Sun Pharma and also for Sparc as it will help in acceleration of approvals from the plant. Currently, we have a ‘hold’ recommendation on the stock.”livemint