Sun Pharma has worked its way out from underneath an FDA ban on a plant in Mohali that it got in its 2015 buyout of Ranbaxy Laboratories. While the action provides some relief from the regulatory burden India’s largest drugmaker has been operating under, Sun’s plant in Halol, which is essential to its U.S. sales, remains stymied by FDA concerns.
Sun today announced the FDA had removed the “Official Action Initiated,” from the Mohali plant, clearing the way for it to again sell products in the U.S. The FDA in 2013 included the plant in a consent decree that also applies to three other facilities it got from the long-troubled Ranbaxy Laboratories. Some conditions of the consent decree remain in place, but Sun said it is working closely with the FDA for “100% cGMP compliance at its manufacturing facilities.”
When Sun closed on its $4 billion merger of Ranbaxy Laboratories, Sun founder Dilip Shanghvi pledged that it would get all four of the Ranbaxy's sidelined plants into 100% compliance with FDA requirements. But then Sun ran into regulatory problems of its own.
First the FDA banned products from a plant in Karkhadi in Gujarat, India, but that facility was not key to sales in the U.S., its largest market. That led the agency to take a look at Sun’s Halol facility in 2014, where it uncovered problems like data manipulation. It cited the facility and the next year issued a warning letter. Late last year, FDA investigators went back for a follow-up inspection but again found shortcomings.
The action has kept Sun from realizing the great potential it had seen when it bought Ranbaxy and became India's largest drugmaker and the fifth biggest generics maker in the world. For its last quarter, the company reported U.S. sales of $507 million, which was up 4% in large part because of its launch of Olmesartan, a generic of blood pressure med Benicar. The U.S. accounts for 45% of Sun’s overall sales. However, the Mumbai-based company saw its net profit for the quarter drop about 5% to 14.72 billion rupees ($219.87 million), falling way short of the $267 million that analysts on average had forecast.