Dr Reddy’s Laboratories has received a warning letter from the US Food and Drug Administration (FDA) for its chemicals manufacturing facility in Cuernavaca, Mexico.

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Industrias Quimicas Falcon de Mexico, a wholly owned subsidiary of Dr Reddy’s, manufactures intermediates and active pharmaceutical ingredients (APIs).

The FDA letter cites four discrepancies pertaining to the manufacturing process at the facility.

A team from the regulator had visited the facility in November 2010, the company said in a statement. “That inspection resulted in issuance of Form FDA 483, with observations. Dr Reddy’s felt it responded to the 483 observations by implementing a number of corrective actions. However, the FDA has asked for additional data and corrective actions to the items listed in the warning letter. Dr Reddy’s takes these matters seriously and will respond to the FDA within the stipulated timeframe,” it said.

The company said it will work “collaboratively” with the FDA to resolve the issues.

Still, the overhang is expected to impact supply of products manufactured at the facility.

The issuance of Form FDA 483 is said to be with regard to non-compliance in manufacturing practices.

Sources said the regulator had identified significant deviations from good manufacturing practices for manufacture of APIs. The objections are said to centre on the analytical methods used to test the APIs.

An API, or bulk drug, is the actual drug in a formulation. Typically, medicines contain several inactive substances for flavouring, binding and colouring, etc.

According to industry analysts, the warning letter implies that the FDA was not happy with the corrective measures put in place by the company.

Dr Reddy’s had acquired the facility — said to have multi-tonne annual capacity — from Roche in 2005. The unit offers a range of services, including analytical development, process R&D and scale-up, production of advanced intermediaries and APIs, dosage development and contract manufacturing dosage. The size of business generated by

Dr Reddy’s reported global generics revenues of  Rs5,330 crore ($1.2 billion) last fiscal, up 10% over the previous year, led by buoyant sales in the North America and emerging markets.

Revenues from North America made up 35.64% of the pie at Rs1,900 crore ($426 million), up 18% year on year, while those from Russia & other CIS markets weighed in with a 20.45% share at Rs1,090 crore ($244 million), up 19% on year. India revenues too were up 15% at Rs1,170 crore ($262 million), accounting for 22% of the pie. Revenues from Europe, however, proved a drag, accounting for 16% of the pie and declining 13% to Rs840 crore ($189 million).

In fact, buoyant generic drug sales in the US helped Dr Reddy’s double profits in the fourth quarter, beating forecasts. Consolidated net profit for the quarter was Rs335 crore (Rs167 crore), riding on a 23% jump in consolidated sales to Rs2,017 crore. North America generic sales revenue, in fact, rose a whopping 68%. However, Europe sales fell 5% to Rs200 crore as German arm Betapharm struggled with pricing issues.