USFDA lifts import ban on Sun Pharma's Mohali plant, shares surge 5%

India largest drug maker Sun Pharma on Tuesday said it was informed by USFDA, that it will lift the import alert imposed on the Mohali manufacturing facility and remove the facility from the official action initiated (OAI) status.

"This proposed action will clear the path for Sun Pharma to supply approved products from the Mohali facility to the US market, subject to normal US FDA regulatory requirements," Sun Pharma said in a statement.

The Mohali facility was inherited by Sun Pharma as part of its acquisition of Ranbaxy Laboratories in 2015.

The USFDA had in 2013 ordered the Mohali facility to be fully subject to Ranbaxy's Consent Decree of Permanent Injunction. Certain conditions of the consent decree will continue to be applicable to the Mohali facility.

A consent decree is a legal agreement that is reached between a company and the USFDA, detailing the voluntary actions pledged by the affected company to remedy non-conformance, including systems improvements, and to avoid FDA litigation.

"This development illustrates Sun Pharma's commitment to work closely with the USFDA and strive for 100 percent current good manufacturing facilities (CGMP) compliance a its manufacturing facilities," Sun Pharma said.

Shares of Sun Pharma rose as much as 5.33 percent and were trading at Rs.720 on BSE at 1.59 pm, the benchmark Sensex gained 1.81 percent and was trading at 29,471.38 points.

Analysts said the import alert removal on Mohali facility may not impact the company's revenues in the near term but indicates some progress made by Sun Pharma in resolving regulatory mess it has inherited from Ranbaxy.

"The plant was fairly new when it was caught by US FDA," Surajit Pal, research analyst at Prabhudas Lilladher, told CNBC-TV18.

Pal said that it may take some more time for the plant to start contributing meaningfully towards US sales. "I don't see any financial impact in near term," Pal added.

In September and December 2012, FDA inspections identified significant CGMP violations at Ranbaxy’s Mohali facility, including failure to adequately investigate manufacturing problems and failure to establish adequate procedures to ensure manufacturing quality.

With all four manufacturing facilities in India barred by the USFDA, Ranbaxy was left with only Ohm Labs, New Jersey, in the US to cater to the market there.

Sun Pharma has been struggling with regulatory issues at its Halol and Karkhadi units along with the plants acquired from Ranbaxy including Dewas, Paonta Sahib and Toansa.