Wockhardt's latest regulatory trouble hits U.S. unit

Wockhardt Managing Director Murtaza Khorakiwala

India's Wockhardt recently dodged a bullet at home when the country's Drug Controller General lifted a production ban there. But now, it may be in more hot water in an even bigger market.

The FDA has expressed concerns over production processes at Wockhardt's U.S. unit, a top exec told Reuters after a recent inspection there. Managing Director Murtaza Khorakiwala said at an analyst briefing that it "was not a very negative inspection" and told the news service the company had responded to the agency's observations. But if Wockhardt's response isn't up to par, penalties could be on the way--including a production ban in its largest market.

That's the last thing the drugmaker needs. The Illinois-based unit accounts for more than 50% of Wockhardt's U.S. sales, which in turn make up 45% of overall sales for the company. And Wockhardt's financials are already hurting thanks to regulatory issues: Tuesday, shares dipped nearly 5% after the company reported a nearly 78% drop in consolidated net profit for the quarter ended in March, India's Business Standard reports.

Those issues have cropped up with authorities in the U.S. and the U.K., where problems at Wockhardt's Indian facilities have severely limited its export potential. A year ago, the FDA put a ban on the company's Waluj plant after finding sanitation issues and falsified test data there. An import alert followed in November for its Chikalthana facility, the site of further test-results tampering. Britain's Medicines and Healthcare Products Regulatory Agency (MHRA) has issued restricted licenses on both those plants and one other India-based site as well.

While Khorakiwala told Reuters that Wockhardt has undertaken measures to get back on track--including training workers and hiring consultants--if the Illinois plant joins the restricted list, things could get worse before they get better. In the meantime, Wockhardt is working to move production from the banned plants to its other sites.

"I think we have made significant process in remediation," Khorakiwala told Reuters. But Wockhardt has "no way of understanding how the regulatory agency would view that and what kind of position they are taking."

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