Lupin gets 8 observations from US FDA, stock down 2.25%

Lupin on Tuesday said it received eight observations in Form-483 from US FDA for its Aurangabad formulation facility.

The company didn't specify the nature of these observations.

US FDA completed an inspection of Aurangabad facility on April 26.

"We are in the midst of putting together a response to address the said observations," Lupin said in a statement.

"We wish to state that the company has multiple facilities which cater to the US and other advanced markets and undergo periodic routine inspections by the US FDA or other regulators from different countries, in the normal course of business," the statement added.

CNBC-TV18 earlier in the day reported on a number of observations made on Lupin's Aurangabad plant.

(A few of them included effectiveness testing of finished drugs not being performed; surfaces that come in contact with drugs are not sanitised; no reliability of temperature, humidity data; clothing of personnel engaged is not appropriate; drug containers not tested for microbial contamination; lack of adequate exhaust systems to control contamination; firm does not have written procedure to review stored data and market complaints and adverse drug experiences not investigated.)

“The US Food and Drug Administration (FDA) issued eight observations for its Aurangabad unit, which was inspected between April 17 and 26, 2017. These observations pertain to some market complaints regarding a contamination of the drug and its effect on the consumer; some data related issues and some manufacturing protocols are not being followed,” said Sarabjit Kour Nangra, VP Research, Pharma, Angel Broking in client note.

The plant is estimated to be contributing around 10-15 percent of company's US sales. Thus, on an overall basis, the plant’s contribution to the overall sales is not that much. Also, company still has time to revert on these observations. Hence, we are not currently changing our estimates of the company, Nangra added.

Another analyst who didn't want to be named said the observations were largely procedural in nature.

Lupin on April 28 said the company’s Goa manufacturing facility was issued Form 483 citing three observations.

The US drug regulator conveys its concerns on manufacturing practices through Form 483.

Companies that receive its observations must respond in writing with a corrective action plan and implement it quickly. If the company fails to meet the regulator’s expectations, a warning letter may be issued.

Shares of Lupin dropped 2.25 percent to close at Rs 1250.70 on BSE, while the benchmark Sensex gained 0.02 percent to end 29,933.25 points.