Dive Brief:
- Investors in Sun Pharma can breathe a sigh of relief after the company said Tuesday the Food and Drug Administration had cleared its key Halol manufacturing plant, resolving a long-standing regulatory headache for the drugmaker.
- The green light from the U.S. regulator ends a two-year odyssey for Sun, India's largest generic drugmaker by market share. A failed inspection in 2015 has hampered operations at the Halol facility, which at one point accounted for about a fifth of Sun's U.S. revenue.
- "The agency concluded that the inspection is now closed and the issues contained in the warning letter issued in December 2015 have been addressed," Sun said in a June 12 statement.
Dive Insight:
Sun's struggle to win an all-clear for its Halol plant is the most prominent example of the regulatory challenges India's generic drug industry has faced in recent years.
Between 2015 and 2017, the FDA's Office of Manufacturing Quality issued 39 warning letters to manufacturing facilities based in India — a notable jump from the preceding three-year period. Such warnings can have real consequences, delaying new approvals from the sites in question and potentially leading the FDA to block imports.
For Sun, the 2015 warning letter has weighed on sales and added remediation costs as the drugmaker has worked to address the FDA's concerns.
In February, inspectors from the FDA traveled to Gujarat again to re-inspect the Halol plant, issuing a Form 483 with three observations. A previous Form 483 issued to Sun in 2016 had detailed nine observations, suggesting Sun had made progress in bringing the facility up to code.
Shares in Sun then rose last week after reports the FDA had classified its latest inspection as "voluntary action indicated." A VAI designation indicates some objectionable conditions were observed but don't merit further regulatory action.
Sun has now confirmed the positive development. "This is an important development for Sun Pharma," said Dilip Shangvi, managing director of the drugmaker, in a statement. "We remain committed to following the highest levels of quality and 24x7 cGMP compliance at all our manufacturing facilities globally."
Since reports of the VAI came out Friday, shares in Sun have risen by nearly 11% in trading on India's National Stock Exchange.
Bringing Halol back up to speed should help Sun in the U.S., where it earned roughly 35% of its overall sales in the three-month period ending in March. Sun expects low double-digit growth from topline revenue, baking in clearance for Halol into that guidance.
But the drugmaker isn't out of the woods. Increasing competition and pricing pressures in the U.S. generic market have hurt sales and Sun expects to "rationalize" its spending on generic R&D as certain projects are now unviable.