USFDA increases inspections of Indian drug facilities, investors remain concerned

Updated : January 20, 2020 02:47 PM IST

In what has been a tough start for Lupin, their Vizag API manufacturing plant was inspected by the USFDA and issued 5 observations.

The street seems most concerned about Lupin because the regulatory developments in 2020 join a list of already outstanding issues for the company.

After a lull during the holiday season, 2020 has seen a flurry of USFDA activity. While a few companies have seen inspections from the US drug regulator in January, some have received updated statuses for their facilities.

Starting with the large caps, Cipla informed the exchanges on January 20 that the company had received an Establishment Inspection Report (EIR) from the USFDA for its Patalganga facility. An EIR indicates the closure of an inspection by the US drug regulator. The Patalganga facility located in Maharashtra was inspected by the USFDA in November 2019 and was issued four observations. The EIR now indicates a closure by the USFDA of this November 2019 inspection.

Strides too informed the exchanges that the company received an EIR for its Florida facility. Inspected in December 2019, this facility manufactures soft gel capsules. Strides plans to transfer the manufacturing of soft gel capsules from other sites to this facility. They also plan to add additional formulation capacities which will mirror their formulation plant in Singapore. The plan is to help tap opportunities to sign contract agreements with various federal governments.

In terms of inspections, it was good news for Biocon. Their facility in Bengaluru that manufactures oral solid medicines was inspected last week (January 13 to 17^th) and was cleared with zero observations. The inspection was triggered by a new drug filed by Biocon from the facility and hence was termed as Pre-Approval Inspection (PAI).

In what has been a tough start for Lupin, their Vizag API manufacturing plant was inspected by the USFDA and issued 5 observations. The plant was inspected from January 13 to 17 and was the second facility to be inspected by the USFDA in this month. Lupin’s Nagpur plant was inspected by the USFDA for over four days from January 6 to Jan 10^th and received 2 observations in a Pre-Approval Inspection. The company also received an Official Action Indicated Status from the USFDA for its Tarapur facility located in Maharashtra. An Official Action Indicated (OAI) status means there is a higher chance of the plant receiving a warning letter.

Investors await developments on inspections

The street seems most concerned about Lupin because the regulatory developments in 2020 join a list of already outstanding issues for the company. The Tarapur facility was the fifth plant to receive an Official Action Indicated status by the USFDA in the past 12 months. The others were the company’s Mandideep plant and Somerset facility in March 2019 and the Pithampur Unit 2 and Goa plant in April and May 2019 respectively. The Mandideep plant eventually received a Warning Letter in September 2019 and the Pithampur Unit 2 and Goa plant have had a warning letter since November 2017. The OAI status on both Pithampur Unit 2 and Goa plant in 2019 would mean the warning letters continue. The street will be watching developments on these facilities very closely.

It is not only Lupin that the street will be watching closely, but the likes of Sun Pharma, Cipla, Dr Reddys, Aurobindo and Cadila too. Investors will look out for developments on some of these companies’ key plants that were inspected in 2019. For example, updated status on the eight observations that were issued to Sun’s Halol plant, 12 observations issued to Cipla’s Goa plant and the eight observations issued to Dr Reddys Duvvada facility. The street will watch for re-inspections of key facilities such as Dr Reddys’s Srikakulam API plant, Cadila’s Moraiya, Glenmark’s Baddi plant, Stride’s Puducherry facility and Torrent’s Indrad facility. It will also watch for an update on Torrent Pharma’s Dahej facility which has an Official Action Indicated Status and Jubiliant Life’s Nanjangud which has an OAI status and the company’s Roorkee plant that has a warning letter.

Aurobindo will be another keenly watched company in 2020. The street will await an update on two key plants – Unit 4 that received 14 observations in November 2019 and Unit 7 that received 7 observations in September 2019. Besides that, the company has a warning letter issued to its Unit XI in 2019 and an OAI status on its Unit I and Unit IX, developments on these three facilities will be closely watched too.

USFDA increases inspections of Indian drug facilities, investors remain concerned

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