India's Strides Arcolab some weeks back let the markets know it had received a Form 483 from U.S. regulators for one of its Indian plants, but it insisted it was on top of the problems. Whatever steps being taken were not enough, however, to keep the FDA from issuing a warning letter, which Strides announced Monday. And it turns out it is for one of its Agila Specialties plants, the sterile injectable drug unit it is selling to Mylan ($MYL) for $1.6 billion.
In a filing with the Indian stock exchange, the drugmaker said the "sterile manufacturing facility 2 (SFF) at Bangalore of Agila Specialties," received the warning, according to MSN News. A second Agila plant that makes oncology drugs was inspected but received no observations. The FDA has yet to post the warning letter, so its concerns are not yet known, but Strides said the company was committed to "work collaboratively and expeditiously with the USFDA to resolve concerns cited in the warning letter in the shortest possible time." When the company first indicated inspectors had issues, CEO Arun Kumar told investors: "With our past experience, we are confident these Form 483s would be addressed in a diligent manner."
The Hindu Business Line, citing a PTI news service story, reported that Mylan is aware of the issues and said it will not hinder the deal. "Based on what we know today, we continue to expect to close the Agila acquisition in Q4 2013 and do not expect that the matter will have a material impact on our financial assumptions with regard to our combined business," a company spokesperson told PTI in an email. The deal with Mylan was recently approved by the Indian government. There has been concern in India that Mylan might stop making some of the low-cost drugs that Agila currently manufactures for the domestic market, but Mylan pledged to expand production for the Indian market.
The news of the warning letter received by Strides was overshadowed Monday by Ranbaxy Laboratories reporting that the FDA had issued an import alert on its third plant in India devoted to the U.S. market. That leaves India's largest generic drugmaker with only a plant in New Jersey approved to sell drugs in the U.S. That ban came a couple of months after regulators in both the U.S. and the U.K. issued an import ban against a Wockhardt plant in India. Because India is one of the largest producers of drugs and ingredients for the U.S. market, the FDA has beefed up its inspection capabilities there.