Dr. Reddy’s Sinks 18% As FDA Scrutinzies India Manufacturing

Hyderabad-based Dr. Reddy’s Laboratories has received a warning letter from the US Food and Drug Administration wherein the drug regulator has sighted its observations for the company’s three facilities, the pharma major informed the Bombay Stock Exchange on Friday.

The warning letter means Dr Reddy’s will not receive FDA approvals to sell drugs manufactured at the plants for now, a blow for business at a company which relies on the United States for a majority of its sales.

Dr. Reddy’s traded 13 percent lower at 3,696.80 rupees at 11:23 a.m.in Mumbai, headed for the its biggest drop since March 2004. Dr. Reddy’s had transferred the technology for manufacturing the bulk ingredient for Nexium to another site, Chief Operating Officer Abhijit Mukherjee said in an interview in March. “We have changed the manufacturing site for Nexium drug which was earlier produced at Srikakulam plant”, Saumen Chakraborty of Dr Reddy’s Lab told ET Now. Such letters are issued by the agency when it finds a manufacturer has “significantly violated” its regulations.

The latest warning letter was triggered by inspection by US FDA authorities of the company’s factories in November 2014 and in January and February this year.

The FDA has already banned plants of other Indian firms, such as Wockhardt Ltd and Ranbaxy Laboratories Ltd, a unit of the country’s largest drugmaker Sun Pharmaceutical Industries Ltd, after finding faulty, fudged or incomplete data records in recent years. “We will continue to actively engage with the agency to resolve these issues and we have also embarked on an initiative to revamp our quality systems and processes, as an organization wide priority”, Dr Reddy’s chief executive GV Prasad said. The company is required to respond to the agency within 15 days.