Wockhardt Ltd. (WPL), an Indian maker of insulin and hepatitis vaccines, will not win new drug approvals this year for about half the pending applications in the U.S. after that nation’s regulator placed import curbs on a plant.
The Food and Drug Administration’s restrictions apply to Wockhardt’s Waluj facility in Aurangabad, which accounted for half of the 40 new drug applications, Chairman Habil Khorakiwala told analysts in a conference call today. The U.S. regulator issued an import alert for products from the plant because the section that makes injectable drugs didn’t meet its standards, he said.
Wockhardt is the latest in a string of injectables-makers including India’s Aurobindo Pharma Ltd. (ARBP) and Lake Forest, Illinois-based Hospira Inc. (HSP) that have come under scrutiny as the FDA steps up surveillance of quality control for injectables manufacturing. As more drugs lose patent protection, the global market for generic injectable medicines will swell 42 percent to $17 billion by 2020, according to Citigroup Inc.
“The problem is not just getting the old products back,” said Anand Bagaria, an analyst at Finquest Securities Pvt. in Mumbai who plans to review his rating of Wockhardt. “Whatever major approvals they’ve filed from the factory are not going to go through until the import restrictions are cleared. Growth will be impacted from that.”
Wockhardt had its biggest ever two-day plunge in Mumbai trading. The shares fell 6.1 percent to close at 1,234 rupees, extending their two-day decline to 25 percent. The stock jumped more than fivefold last year.
$100 Million Sales
Wockhardt will lose about $100 million in revenue as a result of the import alert in the year ending March 2014, Khorakiwala said. It will take the Mumbai-based company at least eight months to get the restricted products back on the U.S. market after it applies for new approvals and moves 80 percent of its production from Waluj to two other Indian facilities, he said.
“We will not receive new approvals from this facility during the year,” Khorakiwala said. Regaining market share in existing products which have come under the import alert could also be a challenge, he said.
The drugmaker is due to report annual earnings on May 27. Revenue is projected to have climbed 21 percent to 56.1 billion rupees ($1 billion) in the 12 months ended March, according to the median of 11 analysts’ estimates compiled by Bloomberg.
Wockhardt in an April 15 statement on its website said the FDA had carried out an inspection at its unit manufacturing injectables for export in Aurangabad. The agency had issued form 483s, a note given to company management when inspectors see conditions that may violate the U.S. Food Drug and Cosmetic Act.
“If we lose market share in the worst case scenario, to gain back market may also be challenging,” Khorakiwala said. “We may lose out because of that dynamic also.”
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