Quality rap on Cadila Healthcare

Cadila Healthcare has received a warning letter from the US Food and Drug Administration (FDA) for its two facilities in Gujarat, the latest in a line of Indian companies to be pulled up by the regulator.

By Our Special Correspondent in Mumbai
  • Published 1.01.16
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Mumbai, Dec. 31: Cadila Healthcare has received a warning letter from the US Food and Drug Administration (FDA) for its two facilities in Gujarat, the latest in a line of Indian companies to be pulled up by the regulator.

The Zydus group company today disclosed that it had received a warning letter from the FDA with regard to its formulation facility at Moraiya and an active pharmaceutical ingredient unit (Zyfine) in Ahmedabad. Cadila said there were no products in the US that used API from the Zyfine facility.

Analysts said the Moraiya unit contributed close to 60 per cent to its US sales. During the second quarter of this year, the US generated sales of Rs 1,004 crore.

"We take quality and matters very seriously and stand by our commitment to fully comply with current good manufacturing practice regulations (cGMP) quality standards across all our facilities. The company is working hard to ensure that the commitments made to the FDA are fully completed.

"The company will continue to take all necessary steps to ensure that the FDA is fully satisfied with our remediation of the above facilities. We will respond to FDA to address the observations within the statutory time permitted in the letter. We are committed to resolve all the issues and revamp our quality systems and processes as the top most priority," Cadila Health informed the stock exchanges in a filing.

News of the warning letter saw the Cadila shares slumping nearly 17 per cent in intra-day trades today.

On the Bombay Stock Exchange, the scrip ended at Rs 327.80, a drop of Rs 57.35, or 15 per cent, over the previous close.

The US drug regulator has recently taken a seriesof actions against Indian pharmaceutical companies, which account for nearly 40 per cent of the generic drugs supplied to America. Dr Reddy's Laboratories and Sun Pharmaceutical Industries have received such communications from the FDA this year.

Industry circles maintain that the FDA will continue with its inspections in 2016 as well, with a focus on whether the companies can successfully resolve the issues highlighted by it. The fate of some facilities, which face import alert in the US, will also be known next year.

Among the other challenges faced by the domestic pharma industry this year are price erosion of generic drugs, slower approvals and lack of strong launches in the US.