Moneycontrol
Aug 12, 2017 10:59 AM IST | Source: Moneycontrol.com

Sun Pharma says it sought re-inspection of its Halol facility, awaiting US FDA response

Shanghvi said the drug maker is giving top priority to bring back Halol unit under compliance

Sun Pharma says it sought re-inspection of its Halol facility
Sun Pharma says it sought re-inspection of its Halol facility

Sun Pharma, India's largest drug maker on Friday said it has completed remediation exercise at its Halol plant in Gujarat and made a request to the US FDA for re-inspection.

“The remedial steps to address these observations are now complete and we are now awaiting a re-inspection by the US FDA,” said Dilip Shanghvi, Managing Director of Sun Pharma in the company’s earnings call.

“Till we have a successful outcome from the re-inspection we will not get any approvals from this facility,” Shanghvi added.

Shanghvi said the drug maker is giving top priority to bring back Halol unit under compliance.

The US FDA re-inspected the Halol facility from November 17, 2016 through December 1, 2016 and issued nine Form 483 observations.

Halol is an important plant for the company and contributed 10-15 percent to its US sales before the factory received a warning letter from the US FDA for violation of manufacturing norms in December 2015.

The warning letter blocked new product approval from that facility impacting the company’s US business.

“We are in the process of shifting some of the products filed from the Halol to alternate sites as a risk mitigation measure,” Shanghvi said.

In the first quarter of FY18—US sales declined 42 percent to USD 351 million due to pricing pressure and delay of new approvals of important products from Halol facility.

US sales account 37 percent of overall sales of the company. Shanghvi maintained that FY18 is likely to be a challenging year for the company with an expectation of a single digit decline in consolidated revenue.

The company EBITDA margin stood at 17 percent in the first quarter.

“As move forward in the coming quarters, we expect our business to improve. We expect a gradual improvement in EBITDA margin from base of Q1 and reaching approximately to 20-22 percent in the second half of this year,” Shanghvi said.

Shanghvi added that the margin guidance doesn't factor any approvals from Halol facility.

The company is expected to get USD 300 million synergy benefit from Ranbaxy acquisition.

The synergy benefit will be used to fund company’s evolving speciality business, Sun Pharma said.
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