Wockhardt's earnings crash under the weight of FDA bans

What does it cost a drugmaker to get crosswise with the FDA about quality manufacturing? In the case of India's Wockhardt, a lot. In fact, it lopped off nearly a third of its sales in the U.S. market last quarter.

The Indian drugmaker--which had two manufacturing plants banned last year from exporting to the U.S.--said that its sales for the quarter were down 14%, or 1,237 crore ($198.2 million), while its U.S. sales were off 30%. It reported that its sales in the U.S. still accounted for 44% of the total. Its profit for the quarter was down 29% to about $48.8 million. The FDA issued an import alert against the company's first plant in May of last year, but the second didn't come until late November--meaning Wockhardt can expect even more depressed U.S. sales in the current quarter.

The drugmaker reported its financials Sunday night, just ahead of meetings to be held by FDA Commissioner Margaret Hamburg with government and industry leaders in her first official meeting to India. Besides the actions against Wockhardt, the FDA in the last 6 months has also banned two Ranbaxy Laboratories plants from shipping to the U.S., a move that left it reporting a loss in the last quarter. The shattered earnings for the two companies add a talking point to both sides in the discussion about the FDA's expectations when it comes to quality manufacturing.

India's Commerce and Industry Minister Anand Sharma told Hamburg Monday on that his office believes the FDA has taken harsh steps against Indian drugmakers before they have gotten a fair hearing about FDA concerns, the Hindu Business Line reports. Ranbaxy has been under special FDA scrutiny for years after it was found to be faking analytical reports for its drug manufacturing. Last May it pleaded guilty to a number of felony charges and agreed to pay $500 million in penalties to settle the ongoing case. In the case of Wockhardt, some of the issues were repeat violations from earlier inspections. Wockhardt has also had plants banned by the U.K.

While the FDA's concerns center on getting safe and effective medicines out of India, Big Pharma is more concerned with India's penchant for revoking patents on some of its most prized drugs. According to Reuters, the U.S. Chamber of Commerce on Friday urged the U.S. Trade Representative to tattoo India as a Priority Foreign Country, a designation given to the most egregious violators of intellectual property rights and one that could lead to U.S. trade sanctions, a position that the lobbying group PhRMA has also espoused. Instead, on Monday the office took actions against India for protecting its solar power industry.

- here's the release (PDF)
- read the Hindu Business Line story
- here's the Reuters story
- and the U.S. Trade Representative announcement