Dr. Reddy's mulling facility shift to avoid losing out on Nexium generic

Dr. Reddy's Laboratories is weighing a shift away from its Srikakulam facility in southern India where some of its key active pharmaceutical ingredients (APIs) are produced and which is under an FDA investigation.

The move would be a preemptive action to avoid losing out on what would be a lucrative contract to make a Nexium generic, if the company were approved to do so. Last week, the FDA gave a Teva Pharmaceutical Industries ($TEVA) subsidiary the go-ahead to market esomeprazole in 20 mg and 40 mg capsules. Nexium, which saw its U.S. patent expire last May, was a $3 billion seller for AstraZeneca ($AZN).

Dr. Reddy's was slapped with a Form 483 from the U.S. regulatory agency following an inspection of the plant, the company said late last year, adding that it received "inspectional observations" related, mostly, to procedural and other compliances of the facility's systems. One of the key APIs manufactured at the plant is for the Nexium generic.

"While the company has sent a comprehensive response, it is trying to shift the key active ingredients manufactured at the Srikakulam facility to another alternative site of its own within a certain point of time," Abhishek Sharma, a pharma analyst, told DNA India. "But if Dr. Reddy's receives a warning letter on the Srikakulam facility and also failed to transfer the key APIs to another plant within the timeframe, then it may lose the opportunity (for the Nexium generic)."

India's Ranbaxy Laboratories had been the first to file for approval for the drug, which would have allowed it 180 days of exclusive sales of the generic. That was until the FDA banned the Ranbaxy plant approved to make the generic Nexium.

Under pressure to allow others to produce generics of the popular heartburn med, the FDA canceled Ranbaxy's exclusive in November as well as the company's exclusive on Novartis' ($NVS) antiviral Valcyte. The agency gave approval to Endo Health Solutions ($ENDP) and Dr. Reddy's Laboratories for Valcyte but at the time did not disclose its plans for generics of Nexium.

- see the DNA India story