Shares of Sun Pharmaceutical Industries fell as much as 6 percent in early trade Thursday on US drug regulator's surprise audit at the pharma major's Halol facility in Gujarat.
According to CNBC-TV18 sources,United States Food and Drug Administration USFDA inspectors in two teams are auditing both the injectibles as well as oral solids units at the plant, with one team focusing on manufacturing processes and other closely auditing quality control and assurance departments.
It is learnt that majority of ex-Taro products of Sun Pharma for the US market come from Halol facility, the largest plant of the company, which supplies 40 percent of US sales and contributes 25 percent to consolidated profit.
So, if sales from its subsidiaries Taro and URL are removed, analysts say nearly USD 300-400 million of company's sales would depend on products manufactured at Halol. In that light, the USFDA audit and its results are important to note.
Sources believe this may just be minor observations, but, in case there is a serious observation, it would be negative for the company. However, this will be known only once the audit completes and USFDA issues the form 483 with its observations.
It is also important to note that analysts have in the recent past raised concerns about multiple recalls that Sun made from the US market of products made at Halol. In July 2014 report, Credit Suisse had highlighted the possibility of an increased scrutiny.
Sun had recalled 40,000 bottles of Venlafaxine Hydrochloride extended-release tablets from the US market in July 2014. Reason noted was that stability results found the product did not meet the drug release dissolution specifications. 200 vials of the chemotherapy drug Gemcitabine were recalled in July due to a lack of assurance of sterility. In March, the company had recalled 2,528 bottles of Metformin extended release tablets, when a customer complained that one of the bottles contained tablets of epilepsy drug Gabapentin.
Besides, Sun's other plant Kharkadi in Gujarat is under a USFDA import ban with serious deviations. USFDA in its warning letter on Kharkadi had asked the company to review all its global facilities for similar deviations.
At 09:41 hours IST, the stock was quoting at Rs 811.50, down Rs 48.15, or 5.60 percent amid high volumes on the BSE. Ranbaxy Labs, which is likely to become Sun Pharma's subsidiary soon, fell nearly 4 percent.
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