Feb 16, 2017 10:17 PM IST | Source:

Cadila gains on resolution of its Moraiya plant warning letter

The company said it did not receive any observations from USFDA for its Moraiya facility, indicating successful resolution of the warning letter and thereby expects major boost to its US business.

Viswanath Pilla

Cadila Healthcare, part of Zydus Cadila Group, on Thursday, said it did not receive any observations from USFDA for its formulation facility at Moraiya indicating successful resolution of the warning letter on the plant.

The company said USFDA inspected the plant from February 6-15.

FDA undertook a reaudit, after the company completed its remediation work and asked for a fresh inspection.

Cadila received a warning letter from the US Food and Drug Administration (FDA) in December 2015 for violating manufacturing standards at its Moraiya formulation facility in Sanand, Gujarat.

The warning letter has remained a major regulatory overhang on the company, slowing down approvals in the US. Moraiya accounts for 60 percent of US revenues and almost 60 out of company's 200 pending ANDA (Abbreviated New Drug Application) approvals.

Cadila saw sales of Rs 9838 crore in FY16, of which US generic sales constituted 42 percent.

Cadila took an extensive remediation work at the plant and also transferred s e important products from site to another. 

"The process is that now the inspection is through and there are no observations. So, obviously the USFDA will do the administrative work to release us from the warning letter, subsequently we will get approvals," said Pankaj Patel, chairman and managing director of Cadila Healthcare in an interview to CNBC-TV18

"The process could take couple of months," Patel added.

Patel said with resolution in place for Moraiya plant his company expects 40 ANDA approvals in FY18  almost double the guidance of 20 approvals the company gave in recent earnings call indicating a signifcantly better performance in US going forward.

"If the Warning Letter is resolved, not only will CDH have a slew of ANDA approvals (70 within a year), it may deliver the long-awaited niche approvals like Mesalamines, Transdermals and Injectables, among others, over next 3 years and double the US business," said Edelweiss in its recent research report on the company.

Shares of Cadila rose 17.30 percent and were trading at Rs 420 on BSE at 2.48 pm, the benchmark Sensex gained 0.59 percent and was trading at 28,321.06 points.

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