Sun Pharma receives FDA import alert, stock tanks
Mar 13 2014 , Mumbai
The stock plunged 6.35 per cent to Rs 565.60 before closing at Rs 573.60 apiece, down 5.03 per cent from the previous close. Industry experts, however, maintained that the FDA alert won’t impact revenues hugely.
“This import alert was issued by the US FDA as a followup to the last inspection of the facility during which some non-compliance of current good manufacturing practice (cGMP) regulations were identified,” the company informed the stock exchanges earlier in the day.
India’s No. 2 drugmaker in terms of revenue said it remained fully committed to compliance and had already initiated several corrective steps to address the observations made by FDA.
This is the latest blow to India’s $14 billion generic drug manufacturing industry, which has received 48 import alerts from the US FDA over the last three years, triggering concerns about the quality of drugs manufactured and supplied to its biggest market, the United States.
India is the second largest drug exporter to the US behind Canada, with about 40 per cent share in the generic and over-the-counter drugs market.
Sarabjit Kour Nangra, vice-president of research, pharma at Angel Broking, said, “Sun Pharmaceutical manufactures API and formulations at its Karkhadi unit. The news will not have any major impact financially, as the plant’s contribution to the overall sales is not significant.”
The company has a well-diversified manufacturing infrastructure to cater to the US market, which contributed 54 per cent of total sales last financial year. As of March 2013, the company had 12 US FDA-approved facilities, with around six in the US, three in India and one each in Canada, Israel and Hungry.
The shares of the company fell earlier this week after it recalled a generic diabetes medication from the US market. The company’s Detroit-based Caraco Pharmaceutical Laboratories recalled 2,528 bottles of Metformin HCl, a drug
meant to treat Type 2
diabetes, after a customer complained of finding Gabapentin tablets, an epilepsy drug, in the bottle, the Wall Street Journal reported.
Another pharma analyst with a Mumbai-based stockbroking firm said the financial impact of the FDA alert would be negligible, as the Karkhadi plant accounts for less than one per cent of the company’s total sales. “The revenue hit does not look to be substantial,” the analyst said.