U.S. prohibited Indian pharmaceutical factory

| By | Drug Quality Control, FDA, Pharmaceutical Manufacturing

U.S. health regulators have banned a drug production site in India belonging to Divi’s Laboratories Ltd due to manufacturing violations, sending the company’s shares down to a near three-year low.

The U.S. Food and Drug Administration’s ban on Divi’s Unit II factory in the eastern Indian city of Vizag – news of which was posted on the FDA website – is the second setback this month for India’s drugs industry.

The FDA found violations of manufacturing standards at Dr Reddy’s Laboratories Ltd’s drug plant, also in Vizag, during an inspection that ended on March 8, according to a copy of the inspection report seen by Reuters on Wednesday.

Several analysts downgraded Divi’s stock to “sell” and others such as Jefferies maintained their “underperform” rating on Reddy’s stock, citing increasing regulatory challenges.

About 70 percent of Divi’s total sales that depend on the plant are now under threat as other countries may go after the factory, prompted by the FDA action, said Edelweiss analysts.

Divi’s did not respond to an email requesting comment on Wednesday, but said in a statement to exchanges that it had started necessary measures to address the FDA’s concerns.

Shares in the company have plunged 18 percent last week and were mired near a three-year low of 611.45 rupees ($9.34). Dr. Reddy’s stock hit 2,555.20 rupees earlier the day, also their lowest since 2014.

Dr Reddy’s plans to submit “a comprehensive response” to the FDA, which said it had found multiple repeat violations at the site – including problems that the agency had notified the company of as far back as in 2015. Issues listed in the report included data manipulation, as well as a Dr Reddy’s employee lying to FDA inspectors.

The FDA has banned more than 40 Indian factories in recent years over quality control failures and manipulation of data.

SOURCE: reuters
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