The Food and Drug Administration banned imports from a plant operated by Mumbai-based Sun Pharmaceutical Industries Ltd. (SUNP) amid widening scrutiny of Indian drugmakers that feed the $93 billion U.S. generics market.
A Sun Pharma facility in Gujarat state was put on the FDA’s “red list” meaning products can be detained without physical examination, according to a posting on the FDA website. The company, India’s largest drugmaker by market value, plunged the most in almost two years in Mumbai trading.
The curbs are another blow to India’s generics industry, which sells drugs and ingredients worldwide. In January, the FDA placed a ban on products from a plant run by Sun Pharma rival Ranbaxy Laboratories Ltd. (RBXY)
“The FDA is definitely becoming more stringent -- it will streamline this system,” said Surya Patra, an analyst at Phillip Securities Ltd. in Mumbai. “This plant is an old plant, and I don’t think that it is a technically very important plant for Sun.”
Indian billionaire Dilip Shanghvi started Sun Pharma in 1983, selling drugs to treat psychiatric illnesses. Sun’s shares have risen about 40 percent in the past year, helping boost Shanghvi’s wealth to $13.6 billion, according to the Bloomberg Billionaires Index.
The plant makes the antibiotic cephalosporin and the import alert was issued after an FDA inspection of the facility identified “some non-compliance of current good manufacturing practice regulations,” Sun Pharma said in an e-mailed statement today.
“The company remains fully committed to compliance and has already initiated several corrective steps to address the observations made by the U.S. FDA,” it said. The facility’s contribution to Sun Pharma’s consolidated revenues is “negligible,” according to the statement. The company maintained its forecast of 29 percent sales growth for the year ending March 2014.
Cephalosporin facilities are usually dedicated to the production of that type of antibiotic, and generic antibiotics are “pretty insignificant” in their contribution to Sun’s revenue, Patra said. The company is focused more on treatments for chronic disease, he said.
Sun Pharma shares dropped 5.2 percent to 572.95 rupees at the close of trading in Mumbai, their biggest decline since March 2012.
In 2012, branded drugs represented a $232.9 billion market in the U.S., with branded and unbranded generics accounting for another $92.6 billion, according to Standard Chartered.
Since January 2013, the FDA has added more than 20 Indian drug facilities to its import alert list, including two belonging to Mumbai-based Wockhardt Ltd. and two belonging to Ranbaxy.
FDA officials have said they plan to tighten rules on how they regulate the generic-drug industry as a way to convince American consumers that safeguards are in place.
Generic drugs, which made up almost 80 percent of the 4 billion prescriptions written in the U.S. in 2011, helped Americans save $193 billion that year, the Generic Pharmaceutical Association has said, as health-care costs rise and insurers force more consumers to use them.
India’s pharmaceutical industry exported $14.6 billion worth of products in the year ended March 2013, according to data from the Ministry of Commerce. India is the second-largest supplier of over-the-counter and prescription drugs to the U.S., behind Canada.
Sun Pharma and Ranbaxy are separately recalling batches of drugs in the U.S. after complaints of bottling mix-ups, according to an FDA enforcement report earlier this month.
Sun Pharma initiated a voluntary recall of 2,528 bottles of diabetes drug metformin hydrochloride after a customer found some gabapentin tablets, a drug used to treat seizures, in a bottle, according to the report.
The company said in October that it had addressed separate concerns raised by the FDA about its Detroit-based manufacturing unit Caraco Pharmaceutical Laboratories Ltd. The FDA concerns, detailed in two so-called Form 483s obtained by Bloomberg via a Freedom of Information Act request, included temperature-control lapses, some improperly sealed containers and a deviation from quality-control procedures.
Caraco made 33 drugs for the U.S. market including common blood pressure pills and pain killers, until June 2009, when the FDA ordered production to be stopped and U.S. marshals seized products made at the facilities after a series of recalls and “continued failure to meet current Good Manufacturing Practice requirements,” according to an FDA statement at the time. Three years later, the FDA cleared the unit of Sun Pharma to resume operations with two products.
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