Ipca Labs has voluntarily stopped exporting to the US active pharmaceutical ingredients (API) made at its Ratlam plant in Madhya Pradesh.

The move follows regulatory observations by the US Food and Drug Administration (USFDA) on its plant, the company said. Ipca shares plunged 13 per cent, closing at ₹727 on the BSE on Thursday.

Regulatory observation Ipca’s plant had received “certain inspection observations in Form 483 from the USFDA”, the company said, without giving details of the transgressions. The company has decided to temporarily suspend API shipments from its Ratlam manufacturing facility to the US market till the issue is sorted out, it added.

On receiving a 483 observation, companies need to respond to the USFDA on how they are tackling the concerns raised by the regulator. If the problem is sorted out, the company is off the hook. Else, the issue could escalate with the company receiving a warning letter and finally a US ban on products from the errant plant.

Ipca Joint Managing Director AK Jain told analysts that the company expected to sort the issue out in six months. The stoppage in exports would have an impact of about ₹150 crore, he said.

Ipca’s FDA woes come even as India-based drug majors Ranbaxy and Wockhardt deal with long-standing issues with the US regulator. Ranbaxy faces a US ban on four of its plants, and Wockhardt, on two of its plants. Earlier this year, Sun Pharma had received a warning letter from the USFDA on its Gujarat-based plant.

Formulations impact Ipca said that its voluntary stoppage of pharmaceutical ingredient exports to the US would impact its export of finished medicine forms (formulations) to the same market. IPCA’s formulations manufacturing units in Piparia (Silvassa) and SEZ, Indore (Pithampur) use the ingredients manufactured at the Ratlam plant, the company said.

Sarabjit Nangra, Angel Broking’s VP (Pharma Research), says that the development could impact a part of Ipca’s API and formulations business in the US.

In the financial year ended March 2014, the US contributed ₹419 crore or 12 per cent of Ipca’s total sales and 20 per cent of exports. Of this, the formulation to API ratio was around 61:39, said Nangra.