US drug regulator raps Sun Pharma unit

The US subsidiary of Sun Pharmaceuticals, Caraco Pharmaceutical Laboratories, has received a warning letter from the Food and Drug Administration (FDA). 

The US drug regulator has pointed to “technical inadequacies” during an inspection at Caraco’s Detroit facility in May 2008. As a result, Caraco will not receive further marketing approvals until the FDA is satisfied with compliance. 

Sun Pharma holds 70.21 per cent in Caraco, which also has another production facility under construction. Separately, Sun Pharma has two wholly-owned plants in the US. Caraco has 19 pending marketing approvals from the FDA, to Sun’s 77, said a company spokesperson.

Following the disclosure, Sun Pharma’s share price on Bombay Stock Exchange dropped 4.71 per cent today. Caraco’s share prices fell 4.13 per cent on Amex Monday. 

Caraco, which Sun acquired in 2000, has a turnover of $350 million for the year ending March 2008. It also has a marketing tie-up with the Indian parent to sell the latter’s products in the US market. 

Sun Pharma’s revenue for the year ending March 2008 was Rs 3,501 crore ($700 million) and it derives 41 per cent of this from US operations. 

A Sun spokesperson said the FDA’s warning will not have a major impact on its US revenues. Analysts said the decision was unlikely to impact the performance of either Sun Pharma or Caraco since FDA has blocked only future products from the Detroit facility and not the existing pipeline.

Sun’s major revenue earners are the generic versions of the anti-ulcer drug Protonics and cancer medicine Ethyol, which had sales worth $2 billion and $80 million respectively in the US last year. 

“Caraco intends to respond promptly to the FDA within 15 business days,” the company said in a statement, adding that it was confident the issue would be resolved. 

Domestic pharma firms such as Ranbaxy, Wockhardt and Granules India received similar warning letters from the US FDA in the past for defects at their facilities. 

Caraco is setting up a unit to double capacity at its Detroit plant for $22 million. 

Sun’s attempts to gain a stronger foothold in the US by acquiring Israeli drug firm Taro — a company that has strong business interests in the US — recently ran into trouble after Taro’s promoters developed reservations about the deal. The matter is being heard in the US and Israeli courts.