Dr. Reddy's feels FDA heat, gets warning letter for three plants

A regulatory hammer has been hanging over Dr. Reddy's Laboratories ($RDY) since the FDA wrote up one of its plants for falling short of quality standards. That hammer has now fallen hard with the drugmaker becoming the latest large Indian drugmaker to be hit with a warning letter.

The warning was issued for not one but three of Dr. Reddy's Indian facilities, the drugmaker acknowledged on Friday. It said in a statement that active ingredient plants in Srikakulam, and Miryalaguda, as well as its Oncology Formulation manufacturing facility at Duvvada were all named in the letter. The citation came after the FDA did an inspection sweep in November 2014 and then January and February of this year, it said.

The drugmaker gave no inkling of what issues the FDA laid out in the document but said it took the matter seriously and would work quickly to resolve the concerns. "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 had actually been investing in automation for some plants to take as much "human error" out of the drugmaking processes as possible in an effort to avoid the pitfalls of other Indian companies. But its efforts fell short and it now finds itself in essentially the same place as Sun Pharmaceutical and Ranbaxy Laboratories, which Sun now owns, as well as Wockhardt and others. All have had their earnings beaten down when work to fix problems has cut their production, and by extension, their sales in the U.S. Sun, Ranbaxy and Wockhardt have had products banned from being shipped to the U.S. from certain plants as well.

Some Indian pharma officials have complained that FDA expectations keep changing and that the country is being singled out by the agency. The FDA has responded that it is just a matter of numbers. The U.S. gets an estimated 40% of its generic and over-the-counter drugs from India, second only to Canada, so India gets more oversight.

The FDA started paying more attention to Indian manufacturing standards a decade ago after a whistleblower alerted the agency to the fact that Ranbaxy plants were often faking drug-testing data, passing for export drug batches that had actually failed testing. The FDA then opened an office in the country staffed with inspectors. As that operation has gotten established more and more Indian drugmakers have been cited for shortcomings, often over data integrity.

- read the statement