Sun says the FDA has issued warning letter for Halol plant

Sun Pharmaceutical Managing Director Dilip Shanghvi

Since its key plant in Halol was written up by the FDA following an inspection last year, Sun Pharmaceutical has gone all out to get on top of the agency's concerns. It has brought in outside consultants and invested in new systems and employee training. But it wasn't enough to ward off an FDA warning letter.

India's largest drugmaker acknowledged over the weekend that the FDA had formalized its concerns with the plant in the warning letter. It said its effort to make changes began as soon as the FDA inspection highlighted them in September 2014 and that it has communicated regularly with the agency about its progress. But it says it will continue to work diligently until the FDA is satisfied.

"While our team is working hard to ensure that the commitments made to the U.S. FDA in September 2014 are fully completed, we will continue to cooperate with the U.S. FDA and undertake any additional steps necessary to ensure that the US Agency is completely satisfied with our remediation of the Halol facility," Managing Director Dilip Shanghvi said in a statement.

Shanghvi made similar statements when Sun last year announced its $4 billion, all stock deal to buy long-troubled competitor Ranbaxy Laboratories, a deal that solidified its position as India's largest drugmaker and made it the fifth largest generics producer in the world. At the time, it was talking about the four Ranbaxy plants that the FDA had banned from shipping products to the U.S. because of ongoing concerns over data integrity and the potential for contamination. But months before Sun completed its buyout of Ranbaxy, the FDA issued its citations for Sun's Halol facility, a plant which produces about 15% of its U.S. sales.

The remediation at Halol has forced the company to shift production of its approved generic of Novartis' ($NVS) top-selling drug, cancer pill Gleevec, to another facility to meet its Feb. 1 launch date. The restrictions on the Halol site also tripped up its effort to move into new drug development. Sun Pharma Advanced Research Company won its first FDA drug approval in March for epilepsy drug Elepsia XR, only to have it withdrawn 6 months later because of the lingering issues at Halol.

All of this has undermined its earnings. The drugmaker last month reported that sales in the U.S. were $510 million in its last quarter, down 28% compared with the same quarter a year ago. The U.S. accounted for 48% of total sales of about $1 billion. According to Reuters, analysts at Indian brokerage Kotak told investors they don't foresee the FDA reinspecting the Halol site before Q2 2017. Morgan Stanley, citing restrictions on the Indian plant, have lowered their earnings estimates for Sun for both 2017 and 2018.

- here's the release
- more from Reuters

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