Sun Pharmaceuticals' Halol plant gets 'import alert' from USFDA

The Halol facility of Sun Pharmaceuticals, the eighth-largest pharma company in the US generics market, was slapped with an import alert by the US Food and Drug Administration (USFDA), which could result in shipments from the Gujarat plant being refused entry into the USA.

As a result, analysts expect a 2-3 per cent hit to the firm’s top line and a 5-6 percent impact on its earnings before interest, taxes, depreciation, and amortisation (Ebitda).

On Thursday, the company’s stock took a beating, declining 3.57 per cent on the BSE. The USFDA had imposed an import ban on the Halol plant in December 2015 too. 

It took Sun Pharma more than two years to get an Establishment Inspection Report (EIR) in June 2018 clearing the facility.

The company said in an exchange notification on Thursday that it had received a communication from the USFDA stating that the facility was listed under ‘Import Alert’. “The Import Alert implies inter alia, that all future shipments of products manufactured at this facility are subject to refusal of admission to the US market until the facility becomes compliant with CGMP (Current Good Manufacturing Practice) standards,” it added.

However, the USFDA has excluded 14 products from this import alert, subject to certain conditions, Sun Pharma said.

Sun Pharma said: “For the year ended March 31, 2022, supplies to the US market from the Halol facility accounted for approximately 3 per cent of the company’s consolidated revenues, including the 14 excluded products as mentioned above.”

The USFDA inspected the facility between April 26 and May 9. It had issued a form 483 with 10 observations after the inspection.

The Halol facility was classified ‘Official Action Indicated (OAI)’ in March 2020, and was awaiting re-inspection. That was delayed, however, because of the pandemic-related travel restrictions.

During the second quarter earnings call, Sun Pharma’s Managing Director Dilip Shanghvi had said: “My understanding broadly, is that if you get an OAI, then depending on the USFDA’s expectation, we will continue to address all the observations and remediation efforts. But most of the time, they will revisit the facility before it becomes a VAI (voluntary action indicated).”

Sun Pharma said on Thursday that it will undertake all necessary steps to resolve the issues and ensure that the USFDA is satisfied with its remedial action.