Sun Pharmaceutical Industries is poised for a reprieve from a United States-imposed import ban on products from its Mohali plant.
Sun said that it had been been informed by the US Food and Drug Administration that “it will lift the import alert imposed on the Mohali (Punjab) manufacturing facility and remove the facility from the Official Action Initiated (OAI) status.”
The development comes about three years after the plant was rapped by the USFDA for not adhering to cGMP (current Good Manufacturing Practices) in 2013. Sun inherited this plant from Ranbaxy, following a $4-billion acquisition in 2015.
The possibility of the import ban lifting sent Sun's stock price soaring about seven per cent on Tuesday, ending the day over 3.5 per cent at ₹708 on the BSE.
Sun said that the proposed USFDA action would clear its path to supply approved products from Mohali to the US market, subject to normal US FDA regulatory requirements. The company is presently in the throes of remediation efforts with the USFDA involving its other plants, including its owned facility at Halol and three more troubled inherited ones from Ranbaxy.
Consent decreeThe US FDA had taken action against the Mohali facility in 2013, when it ordered the facility to be fully subject to Ranbaxy’s Consent Decree of Permanent Injunction. Certain conditions of the consent decree will continue to be applicable to the Mohali facility, Sun said, without giving details. (In late 2011, Ranbaxy had signed a consent decree with the USFDA for its plants in Paonta Sahib and Dewas, also facing import alerts since 2008 over data integrity and falsification issues.)
But the mention of the Consent Decree in the latest development on Mohali had market-watchers spooked, tempering the stock's run in the market. While getting out of the regulatory shadow is good, Centrum Broking’s Ranjit Kapadia wondered what condition of the Decree will continue. Could the reprieve be only on select products that are facing a shortage in the US, he asked. Nevertheless, he added, Sun's management had indicated that it would look to get out of the regulatory shadow one plant at a time, and from that point of view, the development is positive.
Another industry insider observed that the plant was relatively new in the Ranbaxy stable, and hence, it was difficult to map its possible revenues.
The plant makes oral dosage forms, and could stand to benefit as Sun's management had recently indicated that they were looking to transfer products that could not be made at Halol because of its regulatory issues.
A clear timeline on the lifting of the Mohali import ban is presently unclear. But the development nevertheless, brings in some optimism not just for Sun but other Indian drug majors also caught up in remediation efforts for years now.