US FDA ban on Sun Pharma unit lifted after over 3 years

Sun's stock rose 6.8 %, before closing up 3.6 % at Rs 708.25

India’s largest drugmaker Sun Pharmaceuticals has informed the exchanges the US Food and Drug Administration (FDA) has said it would remove more than three-year-old import sanctions on its Mohali plant. 

The FDA’s intimation for removal of the plant from the “official action initiated” status will clear the path for Sun Pharma to supply approved drugs from the plant, subject to normal regulatory requirements.

Sun Pharma acquired the Mohali plant as part of its $4.1-billion purchase of Ranbaxy in 2015. Two other erstwhile Ranbaxy plants at Paonta Sahib in Himachal Pradesh and Dewas in Madhya Pradesh remain under an FDA import alert issued in 2008, while a third plant at Toansa in Punjab was banned in 2014.

“The clearance will help Sun Pharma to expand capacity, de-risk future filings and realise manufacturing synergies from the Ranbaxy acquisition,” said Anmol Ganjoo, analyst at brokerage JM Financial Institutional Securities. “However, given that the pending abbreviated new drug applications will be at least three years old, we do not expect any significant launches in the near future,” he added.  

The Mohali plant is relatively new and was used to supply a generic version of the anti-cholesterol drug Lipitor. The FDA took action against the facility in 2013 when it ordered it to be fully subject to Ranbaxy’s consent decree of permanent injunction. Certain conditions of the consent decree will continue to apply on the plant. 

Sun Pharma earns around half its consolidated revenue from the US and its sales have been under pressure for several quarters due to pricing pressure and compliance issues not only at plants acquired from Ranbaxy but also at its own facilities at Halol and Karkhadi in Gujarat.

The Halol plant was issued an FDA warning letter in 2015, preventing new product launches. After a re-inspection of the plant last year, the FDA issued a 14-page list of potential manufacturing violations that Sun Pharma must address before the facility could be cleared. 

The Sun Pharma stock on Tuesday rose 6.8 per cent before settling 3.6 per cent higher at Rs 708.25 on the BSE. 

“This development illustrates Sun Pharma’s commitment to work closely with the FDA and strive for 100 per cent compliance at its manufacturing facilities,” the company said in a statement. Sun Pharma Managing Director Dilip Shanghvi had indicated in the company’s latest annual report the completion of remediation measures at at least one of the erstwhile Ranbaxy plants. 

“The FDA decision indicates that Indian drugmakers are committed to resolving all quality concerns at their plants,” said DG Shah, secretary-general of the Indian Pharmaceutical Alliance.