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Sun Pharma gets USFDA import alert for Gujarat unit

Friday, 14 March 2014 - 8:12am IST | Agency: DNA

Troubles for the Indian pharmaceutical industry do not seem to end as Sun Pharmaceutical Industries, India's largest drug maker by market capitalisation, joins the likes of Daiichi-controlled Ranbaxy and Khorakiwala-promoted Wockhardt in receiving an import alert from the US Food and Drug Authority (USFDA).

The company, on Thursday morning, said that an import alert was issued by the USFDA for its 'cephalosporin' manufacturing unit located at Karkhadi, Gujarat in India. Cephalosporin is a class beta-lactam antibiotics manufactured, both as an active pharmaceutical ingredient (API) as well as formulation, for oral and injectable drugs.

"This import alert was issued as a follow up to the last inspection of the facility, during which some non-compliance of current good manufacturing practice (cGMP) regulations were identified," the company said.
While the Sun Pharma management tried to play down the business impact, investors in the company's shares did not take it lightly as a result of which Sun Pharma stock plunged to a three-month low of Rs 565.50 intra-day, down 7.42% from the day's high of Rs 610.85. After the initial blow, the stock recovered a bit and finally closed at Rs 572.95, down 5.18% from the previous close of Rs 604.30.

Analysts tracking the Indian pharmaceutical sector were taken aback post Sun Pharma's disclosure to the exchanges. "The USFDA import alert certainly raises concerns on the company's claims about the quality of their products. The management appears to be focussing more on profitability and it's time to tighten their socks and focus equally on the quality," said an analyst.

While details about brands being manufactured from the said unit is not known as yet, analysts said there would be at least 20-odd drugs in oral and injectables form from Sun Pharma's Karkhadi plant that supplies only to the US market.

The recent past has seen foreign drug regulators, including USFDA and UK's Medicines and Healthcare Products Regulatory Agency (MHRA), tightening the noose on Indian drug manufacturers resulting into a series of warning letters and import alerts for companies like Ranbaxy and Wockhardt, among others.

"Foreign regulators, primarily the USFDA, are going tough with all the pharmaceutical companies. And India being the largest supplier to the US with over 200 USFDA approved drug manufacturing facilities, the regulator is leaving no gaps in terms of compliance of its cGMPs," said the analyst.

On measures taken post the import alert, Sun Pharma said, it remains fully committed to compliance and has already initiated several corrective steps to address the observations made by the USFDA. As far as impact on their business is concerned, Sun Pharma said that the facility in question has negligible contribution to the company's consolidated revenues and hence maintains its FY2013-14 consolidated sales growth guidance.
Ranjit Kapadia, senior vice president - Pharma, Centrum Broking Ltd, said since there was no significant revenue contribution for the unit in question, the impact on business will be negligible. "It could be 4-5% max. The company is also maintaining its 2014 guidance which was revised in February this year to 29% from the earlier 25% so we don't see the import alert making a significant dent to the business," said Kapadia.

Dr Reddy's recalls heartburn drug from the US market

In another development, Hyderabad-based Dr Reddy's Laboratories (DRL) recalled 58,656 bottles of its heartburn drug lansoprazole in the United States due to a microbial contamination. Thursday's recall follows, similar instances last week by Ranbaxy and Sun Pharma.

According to USFDA, the voluntary recall of lansoprazole delayed release capsules, a generic version of Swiss drugmaker Novartis' drug Prevacid 24 HR, began on January 3, 2014.

Commenting on the development, a DRL spokesperson said, "The voluntary recall is a precautionary measure and will have negligible financial implication." In India, DRL sells the heartburn drug lansoprazole under the brand name Lanzap.

On whether recall will have any impact on the sales of Lanzap in India, analysts said, "That will only happen if the Indian drug regulator (FDA) finds any anomaly in the drug post an analysis."


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