New Delhi, March 08, 2018: Sun Pharma, India’s largest drug maker, is well poised to resolve the US FDA’s warning letter on its Halol site in Gujarat – as the three Form 483 observations the company received from the agency turned out to be minor in nature, according to analysts Moneycontrol spoke to.
US FDA inspectors issue observations on Form 483 at the end of the site inspection outlining any deviations of current good manufacturing practices. The company then will have to file its response in 15 days providing corrective and preventive action plan referred as CAPA. Any failure to respond to the satisfaction of the agency may escalate to warning letter and in some worst cases even an import ban. If the company responds to the satisfaction the US FDA issues an establishment inspection report (EIR) indicating closure of the inspection.
The US FDA conducted Good Manufacturing Practices (GMP) inspection of Sun Pharma’s Halol facility from February 12 – 23.
Moneycontrol on February 23 had reported about Sun Pharma’s founder and managing director Dilip Shanghvi expressing confidence about resolving the three observations pointed out by the American drug regulator.
The three observations that were made public by US FDA relates to certain deficiencies in preventing of contamination and lack of sufficient written procedures for cleaning and maintenance of equipment, as well as sampling, testing, approval and rejection of drug product containers
Below are the three observations:
Observation 1: Separate or defined areas to prevent contamination or mix-ups are deficient regarding operations related to aseptic processing of drug products
Observation 2: Written procedures for cleaning and maintenance fail to include description in sufficient detail of the methods of disassembling and reassembling equipment as necessary to assure proper cleaning and maintenance.
Observation 3: Written procedures are lacking which describe in sufficient detail the sampling, testing, approval and rejection of drug product containers and closures. (Click Here: Halol 483)
“The warning letter on the Halol facility is expected to be cleared in next 6-8 months,” said Amey Chalke, Research Analyst at HDFC Securities point out to the minor observations as per moneycontrol.com.
Chalke said the development is already priced in the stock price.
“We view these to be minor observations, meaning no data integrity issue and no observations in the technical areas,” said brokerage house IIFL.
“Also USFDA has not asked to provide any sort of studies, which indicates that the plant may not require re-inspection if Sun Pharma’s response is found adequate by the USFDA,” IIFL added.
Halol is critical for Sun Pharma as most of the complex pipeline that includes injectables, topical solutions and inhalation products are filed from this facility. Sun Pharma is banking on complex products to beat the pricing pressure it faces in the US market.
The current inspection was triggered after US FDA re-inspected the Halol facility from November 17, 2016 through December 1, 2016 and issued nine Form 483 observations.
The observations were related to data reporting standards, testing procedures, and lab controls.
Halol is an important plant for the company and contributed 10-15 percent to its US sales before the factory received a warning letter from the US FDA for violation of manufacturing norms in December 2015.
The warning letter blocked new product approval from that facility impacting the company’s US business.
CLSA forecasted that incremental revenue from the clearance of Halol is expected to be at least USD 100 million and USD 150 million in years ending March 2019 and 2020, respectively, and even possibly go up to USD 200 million and USD 300 million, increasing its earnings per share by 4 and 10 percent.
“While a possible Halol resolution is positive for the company, but Sun Pharma’s concerns run much deep,” Chalke of HDFC Securities said.
“The declining sales at its US subsidiary Taro, the pipeline that doesn’t look too promising to compensate for the erosion of base business and investments of specialty that may take some more years to deliver are some of the concerns to even maintain a USD 1.6 billion topline,” Chalke said.
Shares of Sun Pharma declined 0.93 percent and were trading at Rs 542.60 on BSE at 12.10 pm, while the benchmark Sensex gained 0.26 percent to 33,836.12 points.
