After five years of struggles, Sun Pharmaceutical has put the problems at its key plant in Halol, India, behind it. The FDA has indicated that Sun’s improvements have reached a point where it sees no action from the agency is needed.
The NAI designation comes even after the agency in June issued a Form 483 with four observations. It is a big deal for India’s largest drugmaker because it means the plant, which accounts for about 15% of its business, can move forward with drug approvals that have been in abeyance while the plant was being upgraded.
The news came the same day that Sun announced it had struck a new deal with China Medical System Holdings Ltd. CMS to develop and commercialize seven generic products in Mainland China. That comes after an earlier deal for another drug. Sun estimated the China market for the eight products at $1 billion.
“This collaboration gives us entry into the Chinese generic pharmaceutical market. We see a lot of potential in China for both our generics and specialty portfolio,” Sun Managing Director Dilip Shanghvi said in a statement. “With more than 65% generics penetration, China represents a significant opportunity for generic pharmaceutical companies.”
The news of the deal and the change of status for the Halol plant lifted Sun Pharma’s shares about 4% in early trading before closing up 2.72%.
Investors had stellar expectations for Sun when it became India’s largest drugmaker in 2012 with a $4 billion deal for Ranbaxy. The Halol plant was expected to play an outside role in that future with a lineup of ANDA’s that would keep it cash flow rich.
But FDA concerns with the plant surfaced up in 2014 and then formalized in a scathing warning letter in 2015 that laid out an accounting of problems that included data integrity concerns. Sun responded by investing millions of dollars in remediation but the FDA continued to find issues it wanted fixed. Last year, the FDA saw enough improvement to approve the facility to manufacture a novel glaucoma drug. Even so, it was tagged with a four-observation Form 483 following a June inspection.
Over that time, the entire U.S. generics market shifted, hurting sales for Sun and the rest of the industry. More recently, Sun has found itself embroiled in investor backlash over alleged insider dealing by one of its directors. The company has made financial gains though, seeing its revenue and profit rise last year.