India’s drugs giant Sun Pharma  gets USFDA warning letter on Halol plant and shares dropped

India’s largest drug giant Sun Pharmaceutical Industries had received a warning letter from the US Food and Drug Administration for violating manufacturing standards (Good Manufacturing Practices) at its Halol plant.The warning letter is an outcome of the September 2014 inspection of its facility located at Halol, Gujarat. The warning to Sun Pharma is the latest in a series of FDA actions over the past year against drug manufacturing plants in India, which supply about 40 per cent of the medicines sold in the United States. “Sun Pharma has always ensured that its products are safe and effective and there is no doubt on the safety of our products in the market,” Dilip Shanghvi, Managing Director of Sun Pharma said. The company said it was taking steps to address the problems outlined by the FDA and that it would request a re-inspection of the Halol facility once it had completed the remedial steps. “Sun Pharma has been working with external consultants to ensure its remediation activities have been completed in an appropriate manner,” the company said. Sun Pharma will respond to this Warning Letter with a detailed plan within the stipulated time frame, it added.

“We will continue to co-operate with the US FDA and undertake any additional steps necessary to ensure that the US Agency is completely satisfied with our remediation,” the company said. The Halol plant contributes about ten to twelve per cent of Sun Pharma’s consolidated revenue. Products made at the Halol plant have not been banned from the US, but the FDA has withheld approval for any new products from the plant until the issues are resolved.

"Sun Pharma expects to request a re-inspection by USFDA upon completion of its remediation commitments," the company said in a statement. The firm and the Halol facility will continue to supply important drug products to meet its obligations towards the customers and the patients who use its drugs in the US and around the world, it added. "The issues raised in the warning letter are mainly those that were raised by observations in form 483 (by USFDA inspectors)," Shanghvi said. The company will wait for the USFDA to put in public the warning letter, he added. As per the USFDA, observations are made in form 483 when investigators feel that conditions or practices in the facility are such that products may become adulterated or render injurious to health. Shares of Sun Pharmaceutical Industries Ltd. dropped down the most in six weeks after receiving a warning letter from the U.S. Food and Drug Administration. Sun’s shares slid 4.6 percent to 754.20 rupees in Mumbai. This is considered as a big loss.

“While we wait for further details of the warning letter, the Halol warning skews risk-reward negatively and could extend the timeline for a recovery in the U.S. business,” Girish Bakhru, an analyst at HSBC Securities and Capital Markets (India) Pvt. said in a report.