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Repeat observations on Vizag site spell bad news for Dr.Reddy’s

Viswanath Pilla

Chillicious News

In a major setback to Dr. Reddy’s, it appears that it may take quite some time to get the green light from the US drug regulator for its oncology formulation site in Visakhapatnam.

It has now emerged that the 13 observations it received from the US Food and Drug Administration on March 18 contained repeats from a 2015 warning letter.

The observations largely pertained to lapses in documentation and record-keeping practices, non-compliance with certain standard operating procedures and failure to undertake root cause analysis.

“We regularly inform all concerned on material events and at present we are not having any other information which is material to the company’s operations or consolidated results,” the company said in a statement to  stock exchanges. “However, as far as the 483 observations are concerned, the company is preparing a comprehensive response and will submit it to the US FDA within the stipulated time.”

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An inspection had earlier taken place at the oncology formulation facility called Unit-7 in the Visakhapatnam Special Economic Zone (VSEZ) at Duvvada. The site manufactures cytotoxic and hormonal injectables and is an important plant, given Dr Reddy’s focus on complex generic filings.

The unit had received a warning letter in November 2015 for batch failures, a probable microbial contamination and certain lapses in quality control procedures.

Dr.Reddy’s then completed remediation work and sought USFDA re-inspection.

Apart from Vizag, Dr.Reddy’s had also received warning letters for its Active Pharmaceutical Ingredient facilities at Srikakulam in Andhra Pradesh and Miryalaguda in Telangana. In all, the three plants in the firing line were contributing about 10-12 percent to the company’s total sales.

Analysts considered the latest observations as a setback for the company as it dims hopes of new approvals for the US market in the next year.

“The observations are concerning and may take at least three to four quarters to resolve,” said Amey Chalke, an analyst tracking pharma at HDFC Securities.

Chalke did not rule out the possibility of Vizag facility getting an import alert if the company fails to address US FDA concerns.

The critical products that will likely get held up owing to potential delays are Gleevec and Melphalan, apart from smaller products such as Capecitabine.

Shares of Dr.Reddy’s dropped 3.99 percent and were trading at Rs.2633 on BSE at 1.42 pm on Tuesday.