Sun Pharma’s Dadra Plant Gets Green Light From U.S. Drug Regulator

Sun Pharmaceuticals Ltd.’s manufacturing facility in Dadra received an establishment inspection report from the U.S. drug regulator after it noted violations of good manufacturing practices at the plant in April.

“We are now pleased to inform you that the above referred inspection is closed,” Sun Pharmaceuticals said in an exchange filing today.

The Food and Drug Administration issues an EIR after the conclusion of an inspection. The regulator first issues observations on any manufacturing practices that are in violation of the Food, Drug and Cosmetic Act, as part of Form 483. The company then prepares its responses to these observations and submits it to the regulator. If the responses satisfy the U.S. FDA, it closes the inspection. If they don’t, the regulator issues either warning letters or import alerts, or forces a shutdown.

The manufacturing plant in Dadra is Sun Pharma’s second largest facility catering to the U.S. market, after its Halol plant in Gujarat. The drugmaker primarily manufactures oral solid generic tablets at the Dadra plant.

In April, the U.S. FDA had issued a Form 483 with 11 observations on the Dadra facility. Most observations were related to standard operating procedures but a few could have been viewed seriously by the regulator. Brokerage Credit Suisse had cautioned investors, at the time, that the escalation of these observations would be a “key risk” for the stock. Motilal Oswal Securities, in a sales note, had said that an early resolution of the Dadra plant would be a “positive surprise” leading to approvals of key new products.

Hurdles Remain

Regulatory compliance hurdles still remain for Sun Pharmaceuticals as the Halol plant is yet to get clearance from the regulator. The U.S. FDA last inspected the plant in the third quarter of financial year 2016-17 and raised nine observations for failing to prevent microbiological contamination and not meeting with testing design standards.

The U.K’s Medicines and Healthcare Products Regulatory Agency has cleared this plant. The company, at its post-earnings conference call, had informed analysts that remedial steps taken to address these observations were completed and added that they were awaiting U.S. FDA to re-inspect the Halol unit. “New approvals from this facility will continue to be on hold till we have a successful re-inspection,” Dilip Shanghvi, managing director, had said in Sun Pharma's annual report.

Shares of Sun Pharmaceuticals closed 0.28 percent lower, ahead of the announcement, tracking the benchmark BSE Sensex that closed lower by 0.28 percent.