Dr. Reddy’s Laboratories
Headquarters: Hyderabad, India
Fiscal year 2017 generic sales: $1.780 billion
Dr. Reddy’s is India’s second-largest drugmaker, and, like its much bigger peer, Sun Pharmaceuticals, regulatory issues defined its 2016. In fact, problems at Dr. Reddy’s manufacturing facilities have been ongoing for a couple of years, and they appear to be far from over.
After a series of inspections at three of its plants turned up problems in 2014 and 2015, the Indian drugmaker entered into intense negotiations with the FDA about dealing with all of the shortcomings. But after responding to the agency's concerns nine times, the FDA issued a scathing warning letter in late 2015 that covered the three facilities, two API operations and a formulation facility where the company makes oncology meds.
Particularly annoying to the FDA was the discovery of a secret testing lab that one plant used for years to test batches, which allowed it to hide failed test results.
Needless to say, these plant failings triggered more problems and dampened generic revenues. Dr. Reddy’s has even been sued by a South Korean client, which blames its own FDA rejection—for a new erectile dysfunction drug—on the fact that a Dr. Reddy’s plant didn’t meet agency standards.
The company's issues have persisted in 2017, with the FDA handing the drugmaker a Form 483 after re-inspections of two of the facilities cited in the previous warning letter.
The Indian drugmaker has taken steps to offset the financial hit. Last year, it bought a portfolio of six over-the-counter brands sold in the U.S., including Doan’s and Bufferin, from New Jersey-based Ducere Pharma for an undisclosed sum. It followed that up with a $350 million deal to buy an unidentified mix of eight generic drugs, some approved and others awaiting approval, that competitor Teva had to unload in the U.S. to secure regulatory approval for its buyout of Allergan’s generic business.
But not all of Dr. Reddy's efforts to reignite its U.S. business have turned out as planned. When its regulatory issues derailed a copycat version of Novartis' blockbuster cancer drug Gleevec, it turned to an outside contractor for help. But in a February 2017 earnings call, a Dr. Reddy’s exec said the contractor faced its own problems with the FDA, which might further delay getting the drug to market.
Dr. Reddy's generated $1.780 billion in global generic sales during its last fiscal year, which ended on March 31, 2017.