US FDA plant approvals: Positive for Ipca Labs, Cadila

After a long wait, Ipca Laboratories has finally received approval for its Indore facility from the US FDA. This facility along with its Silvassa facility would be now used to manufacture drugs to the US market. Its Silvassa facility was already running at full capacity and the company badly needed this new facility to cater to the huge demand in US market. The company now awaits product approvals from this plant and would look for site transfers from its Silvassa facility. Ipca currently has about 12 products approved and has filed for 24 products with the US FDA. With the approval coming in we can expect the company to start filling ANDAs aggressively and increase its share of revenues from the US market. The Indore facility is expected to contribute to about Rs 750- Rs1,000 million of revenues by FY14 and could be the company’s major manufacturing plant with revenue contribution of Rs 4 billion by 2015-16. 

The US FDA has also revoked the warning letter issued on Cadila Healthcare’s Moraiya plant. The company had earlier received a warning letter from US FDA in July 2011 for non-conformity to current good manufacturing practices (cGMP) and possibility of adulteration of the products manufactured from that facility. Although the warning letter did not hamper the regular business of the company, the plant did not receive any new product approvals post the warning letter. Cadila has filed a number of injectables from this plant and with the approval to the plant we can expect injectables approvals coming soon.

Meanwhile, Dr. Reddy’s announced its Q1FY13 results, which were below expectations mainly because of lower than expected performance in the US market, which was plagued by higher competition and pricing pressures on its existing product portfolio. The company’s domestic business has witnessed a strong revival and posted 19% growth compared to single digit growth figures for last few quarters. Going forward, the new product launches (Lipitor, Toprol XL, Boniva) in the US market should drive the growth in the US market and if the strong domestic and emerging market growth continues, the company would be able to announce better results in the coming quarter.