Strides Arcolab gets import alert from USFDA

Company says the product is not meant for the US market and it has approval to supply to a customer only in Africa

Strides Arcolab, a Bangalore-based mid-size publicly-held pharmaceutical company, has received a shocker from the US Food and Drug Administration (USFDA) in the form of an import alert on one of its skin-care products. The company has, however, said the product is not meant for the US market and it has approval to supply to a customer only in Africa.

"The products mentioned in the Import Alert by USFDA are manufactured by our Italian subsidiary Beltapharm for an African customer for over five years and we are working with the USFDA and the African customer, on the circumstances on how these products reached the US market. Strides further wishes to clarify that it has no role in the distribution of any of these products in the US territory," Strides said in a statement.

The company added that its Italian subsidiary has only one Abbreviated New Drug Application (ANDA)-approved product, Imiquimod cream, for the US market and this product has been recently launched and is freely available. Besides Strides' instance of being under the USFDA scanner, large-cap pharma companies from India including Ranbaxy and Wockhardt have also been under severe pressure over various issues with the USFDA.

This is the second instance of Strides being under the USFDA scanner in the recent past after its Bangalore facility received a Form 483 and subsequently a warning letter. The facility has since been sold to US-based generics major Mylan as part of a $1.6-billion deal to sell the specialties business.

As a result of the issue with USFDA, Mylan recently withheld $100 million as part of a $250-million payout, which was supposed to come into Strides' books. Although Strides is yet to give an official statement on why the payout was curtailed, industry analysts indicate Mylan might have to spend a large sum on sprucing up the facility to meet USFDA standards and, hence, had held back the $100-million payout.

Over the past few years, Strides has been aggressively re-organising its structure after a series of complex acquisitions and divestment including the deal with Mylan in December 2013. The other day, Strides announced another Rs 1,200-crore acquisition of Chennai-based Shasun Pharmaceutical in an all-stock transaction.

The Strides stock closed at Rs 713.90 a share on the National Stock Exchange.