Mylan, Critic of Indian Drugmakers, Warned by FDA on Quality

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Mylan NV, one of the generic drug industry’s biggest critics of poor quality at Indian drugmakers, had “significant violations” of manufacturing-quality rules at three plants in India, U.S. regulators said in a warning letter.

The violations include failure to establish and follow written procedures to prevent microbiological contamination, use of torn gloves, poor monitoring to ensure a contamination-free environment and a failure to investigate product complaints, according to the warning letter from the Food and Drug Administration dated Aug. 6.

Mylan is in the middle of trying to close its biggest-ever deal, a $33 billion acquisition of Perrigo Co. The company, whose executives are based in Canonsburg, Pennsylvania, has operations around the world and has pushed for tougher U.S. inspections in India and other foreign countries. Mylan Chief Executive Officer Heather Bresch has called stricter enforcement abroad imperative to ensure access to quality drugs in the U.S.

The FDA warning won’t impact Mylan’s full-year earnings forecast, the company said in a statement Tuesday. Mylan shares fell less than 1 percent to $55.48 at 2:36 p.m. in New York.

All three plants cited by the FDA were acquired in Mylan’s 2013 purchase of Agila Specialties, a unit of Indian drugmaker Strides Arcolab Ltd. Mylan has previously disclosed the inspections of the three sites, according to the company’s statement. Bresch said last year Mylan was working to bring the Agila plants up to code after quality problems were found, and she reiterated the point Tuesday.

India Inspections

“We have been taking extensive action to integrate the Agila business into Mylan’s One Quality Standard,” Bresch said in the statement Tuesday. “We have been and will continue to work diligently to address all of the FDA’s observations and have made important progress.”

The inspections at the Mylan plants were conducted in August and September of 2014 and February of this year. The FDA said in the letter Mylan has 15 working days to respond and take corrective action or the FDA can withhold approval of new drug applications and refuse admission of products into the U.S.

The FDA had cited some of the same quality violations in a September 2013 warning letter to Agila.

’’Although we acknowledge that the Agila facilities were acquired by Mylan recently, you were on notice of the violations,’’ the FDA told Mylan this month. Even without the 2013 warning, “your corporate quality system should have detected and corrected the forgoing violations without FDA intervention,” the agency said.

Mylan had 21 plants in India at the end of 2013. Last year, Bresch said Mylan’s drugs shouldn’t be lumped in with those made by India-based companies. Mylan has a “one-quality” standard, meaning that it holds its factories in India to the same standard as its U.S. facilities, she said in a February 2014 interview.

Trouble Ahead

At the time, she also predicted trouble ahead for India-based firms.

“It’ll get worse before it gets better,” Bresch said. As regulators boost inspections there, consumers will see “more market disruption, more companies being shut down, more bans on facilities,” she said. “I’d be shocked if there’s not.”

In an interview with Bloomberg this month, Bresch said that “as the FDA steps up their efforts in countries like India and China, we’ve continued to say that will continue to allow us to distinguish ourselves.”

The FDA has banned drugs from more than 30 plants in India since 2013, after the agency boosted inspections using fees it charges drugmakers to review their products.

Mylan investors are set to vote on the Perrigo deal Aug. 28. Perrigo has said that Mylan’s offer undervalues the company, and urged shareholders to reject it.

(An earlier version of the story was corrected to show all plants cited by the FDA were part of the 2013 acquisition.)

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