Sun Pharma hit by US FDA ban on Gujarat plant

New Delhi, March 14,2014: In a setback to the country’s largest drug maker Sun Pharmaceuticals, theUS FDA has issued an “ import alert” for all products manufactured at its cephalosporin facility located at Karkhadi, Gujarat. The company manufactures active pharmaceutical ingredients (API) and formulations in this unit.

Following reports, Sun Pharma shares dipped more than six per cent intra-day on the BSE. Shares were closed at Rs 573.6, down 5.03 per cent. The plant accounts for less than one per cent of its overall sales.

According to a statement by the company, the contribution of this facility to Sun Pharma’s consolidated revenues is negligible.

An “import alert” results in detention without physical examination of drugs from firms that have not met “good manufacturing practices”.

According to the company, this alert was issued by the US FDA as a follow-up to the last inspection of the facility, during which some non-compliance of current good manufacturing practice (cGMP) regulations was identified.

“The company remains fully committed to compliance and has already initiated several corrective steps to address the observations made by the US FDA,” it said.

As of March 2013, the company had 12 US FDA facilities, with about six in the US, three in India and one each in Canada, Israel and Hungary.

Sarabjit Kour Nangra of Angel Broking said, “The news will not have major impact financially, as the plant’s contribution to the overall sales is not significant. The company has well-diversified manufacturing infrastructure to cater to the US markets, which contribute around 54 per cent of its sales (FY2013). Also, its subsidiaries of the likes of Taro, Caraco and the recent acquisitions, contribute a major chunk of the sales and its growth. Moreover, the company has successfully resolved the issues in the past. as with respect to Caraco.”

The shares had fallen early this week, after the company had withdrawn bottles of diabetes drug from the US market. Sun’s Detroit-based subsidiary Caraco Pharmaceutical Laboratories recalled 2,528 bottles of Metformin HCL, a drug meant to treat Type 2 diabetes, after a customer complained of finding tablets of Gabapentin, an epilepsy drug, in a bottle.

The US Food and Drug Administration classified the recall as a “Class II,” which signifies a remote chance of severe adverse consequences or death due to the product flaw.

Sun Pharma stock had underperformed the market over the past one month till March 10, falling 2.5 per cent compared with the Sensex’s 7.87 per cent rise.

The scrip also underperformed the market in past one quarter, rising 1.49 per cent as against Sensex’s 3.2 per cent rise.

Other pharma majors like Ranbaxy and Wockhardt are already under US FDA scanner following several import alerts. Business Standard