Ipca to seek US FDA re-audit of Pithampur and Ratlam facilities

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Drug maker Ipca Laboratories said it plans to seek US FDA re-inspection of its Pithampur and Ratlam facilities in Madhya Pradesh in a couple of months, with the company close to completing remedial action.

Remediation action at the Indore SEZ Pithampur plant that makes formulations and active pharmaceutical ingredients is almost finished and the company plans to seek US FDA re-inspection in a month’s time, while Ratlam could take two more months for completion of remedial action.

The company has already sought re-inspection for the Piparia (Silvassa) formulation facility.

Ipca is one of the worst affected companies by the US regulator's action. Three units of the company situated at Ratlam, SEZ Indore - Pithampur, and Piparia (Silvassa) were under USFDA import ban since 2015, adversely impacting its business and margins.

The company's EBITDA margin has dropped from 22.5 percent in FY14 to 13.9 percent in FY17, while the revenue growth stagnated in the last four years. The company reported net sales of Rs 3,210.6 crore in the year ended March 2017. The company has filed 44 abbreviated new drug applications (ANDA) out of which 18 ANDA applications were granted till date. The company had filed 54 drug master files (DMFs) with the US FDA.

“We are hoping the re-inspections should happen by the end of this fiscal year,” said Ajit K Jain, joint managing director of Ipca, told Moneycontrol.

“Most of our plants have been audited by other regulators and were cleared, except for US FDA,” Jain said.

Jain said the company's sole focus is on resolving the import ban.

So far, Ipca spent about Rs 100 crore on remediation work, which involved hiring external consultants and implementation of quality improvement systems across the its manufacturing plants.

Ipca also gave indications of a tough FY18 owing to headwinds in the US market faced by regulatory issues, lumpy malarial business which is largely institutional, and subdued domestic formulation business on account of de-stocking in trade channels on GST rollout.

“The total revenue loss for the company because of the USFDA import alert has been close to Rs 3,000 million (Rs 300 crore) on an annual basis,” said a latest research report by Nirmal Bang.

“Besides the loss of business in the US, the company has also lost tender business which involves procurement of global multilateral funds,” the Nirmal Bang report added.

Another analyst who did not want to be named said there is no fixed timeframe for re-inspection by US FDA as it is at the agency’s discretion.

“There can be a surprise audit anytime once the request for re-inspection is made,” the analyst said.

US FDA found data integrity issues at Ipca’s SEZ Indore - Pithampur, and Piparia (Silvassa) plants, while at Ratlam which is the company’s largest plant that manufactures both APIs and formulations, the agency found deficiencies in computer controls, documentation and testing procedures.