Says Caraco Pharma has not complied with manufacturing standards after warnings.
Sun Pharmaceutical Industries, India’s largest drug maker by market capitalisation, saw its stock price plunge 12 per cent today after the US Food and Drug Administration (FDA) seized all medicines produced by Sun’s US arm Caraco Pharmaceutical Laboratories for repeated violations of manufacturing standards.
US marshals, at the request of the FDA, seized drug products at the company’s Michigan facilities in Detroit, Farmington Hills, and Wixom. The seizure also included ingredients held at these facilities, said an FDA statement.
Up to 33 different drugs may have been seized by the US marshals.
The FDA said it will not allow Caraco to sell drugs in the US until the company gives an assurance that the firm complies with manufacturing standards.
“This action follows Caraco’s continued failure to meet the FDA’s Current Good Manufacturing Practice (cGMP) requirements, which assure the quality of manufactured drugs,” said the US drug regulator.
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Sun Pharma holds 76 per cent in Caraco, which it acquired in 2002.
Analysts said at least 12 per cent of Sun Pharma’s revenues of Rs 4,272 crore is at stake as a result of the seizure at Caraco. Apart from manufacturing its own products at the three plants, Caraco also markets drugs manufactured by Sun.
The company, which has 17 manufacturing sites worldwide, has three of them in the US.
A New York stock exchange-listed independent company, Caraco had a turnover of $337.2 million (Rs 1,635 crore) in 2008-09, of which $112 million (Rs 543 crore) was from sale of own products and $225 million (Rs 1,092 crore) from sale of Sun Pharma products.
“Future prospects depends on how quickly Caraco is able to meet the cGMP standards”, said Ranjit Kapadia, vice-president, institutional research with HDFC Securities.
Sun Pharma and its 12 subsidiaries sell 71 products in the US and another 108 products are awaiting for regulatory clearance, as of March 2009.
A Sun Pharma spokesperson said the company would not comment and was waiting for Caraco’s response to the developments. He said no timeline could be given on when Caraco would be able to resolve the issue.
Caraco alone has approval to manufacture 35 products and another 25 are pending for approval. Caraco cannot sell any of these products now. Between Sun Pharma and Caraco, 108 marketing applications are pending with the FDA, including 25 from Caraco.
Last year, the FDA had banned about 30 drugs manufactured by leading Indian drug maker Ranbaxy, for violating manufacturing standards at Dewas and Paonta Sahib manufacturing facilities in India. A manufacturing facility of Lupin also received warning letters from the FDA for manufacturing violations in November last year.
Caraco was warned about its manufacturing problems in October last year and a repeat inspection in May found unresolved violations, such as poor control of raw materials, processes, data management and higher- than-normal variability in tablet manufacturing processes.
In March, Caraco was forced to recall its entire production of its brand Digoxin, a drug used to treat heart failure and abnormal heart rhythms.