IPCA Laboratories less prone to US FDA alerts on corrective measures

As against the recent spate of alerts being received by several Indian pharma companies from the US drug regulator, the Mumbai-based fully integrated mid-cap company Ipca Laboratories hopes to see a gradual recovery in the US and is less likely to get an import alert from the US Food and Drug Administration (FDA) on its facilities at Ratlam and Indore, according to a recent report by brokerage firm Reliance Securities.

Reliance Securities said that its analysts recently visited Ipca's Ratlam-based API plant to understand the latest developments and progress on corrective measures taken by the company post the receipt of Form 483 in Ratlam and Indore plants.

"We like the company's prudent risk mitigation measures in dialogue with their new consultants and the USFDA. Its preliminary step towards improving the process control at all facilities has received positive response from the customers and the consultants. The company sounds pretty confident of resolving the issues rather than anticipating any adverse outcome. The voluntary cessation of supplies until establishment inspection report (EIR) receipt from the US FDA suggests that an import alert/warning letter has a low probability," said the report.

In July-2014, the Ratlam plant was inspected for 5 days by a 3-member team of US FDA officials including the head, Peter Baker. The management highlighted that there has been a shift in focus in the US FDA's nature of inspection. The regulator is now focusing on electronic data management and process oriented work as compared to the past focus on drug quality.

The report also said that Ipca is voluntarily submitting reports/updates to the US FDA on a monthly basis which will help the US FDA to keep abreast of the latest corrective measures implemented and the detailed guideline on the ones which are under process.

"Management intends to complete all its corrective measures by Dec 2014 and plans to send a comprehensive report by Jan 2015. Once the data is submitted in Jan 2015, Ipca will wait for EIR prior to starting any production. The EIR might take about three months post the data submission," it said.

The corrective measures undertaken by the company include automation of record/journal entry so as to evade the possibility of data manipulation. These measures include installation for LES for QA/QC operations, chromatography equipments, training, monthly update to US FDA and Plan B-Baroda facility, the report further said, adding that it expects Ipca will be able to receive requisite approvals and re-enter the US market only by H2FY16E.

On the other hand, foreign brokerage firm Credit Suisse earlier this month downgraded the company's stock to "underperform" from "neutral" citing the US FDA's recent observations under a Form 483 about its Indore facility. In the research report, it said that the Form 483 for the company's Indore SEZ plant suggests FDA observations are critical. "Credit Suisse is of the view that there are six observations on

Indore facility in Form 483 out of which 2 are critical observations and could delay recovery of Ipca's US sales," one of the Credit Suisse analysts had earlier said.
Earlier in July this year, the company voluntarily stopped shipments from its active pharmaceutical ingredients (APIs) manufacturing facility at Ratlam (Madhya Pradesh) after an US FDA inspection raised certain observations in Form 483. The company had then said that it temporarily suspended the shipments till the issue is addressed.

It had also said that the decision would impact the company's formulations export business to the US market since the formulations manufacturing units at Piparia (Silvassa), and SEZ, Indore (Pithampur) use the API manufactured from the Ratlam facility. Health Canada, too, took action against Ipca Lab raising concerns over reliability of data on "safety and quality" issues.