Drug-maker Wockhardt’s regulatory woes in the US have worsened, with the Food and Drug Administration imposing an “import alert” on its Chikalthana plant in Aurangabad.
The Maharashtra facility accounts for about $230 million (Rs 1,430 crore) in revenues and is a significant contributor to the company’s kitty.
Under an FDA import alert, products are detained without physical examination when they come from companies the US regulator says do not follow stipulated good manufacturing practices (GMP).
This is the second Wockhardt plant with products facing a ban in the lucrative US market, the first being a unit in Waluj, also near Aurangabad.
Confirming the development, Wockhardt said in a statement: “The company has already initiated several steps to address the observations made by the US FDA.” The import alert on Chikalthana excludes five products, the company said. However, Metoprolol XR, a key heart pill, the generic version of which Wockhardt sells in the US, is under the import ban.
On Wednesday, when news of the FDA ban broke, the company’s scrip plunged. Wockhardt’s shares closed at Rs 430.15, down 9 per cent, on the Bombay Stock Exchange.
Just months ago, the US FDA had raised concerns on the Chikalthana plant. This was followed by the regulator in the UK also issuing a restricted GMP certificate to the plant. The plant was allowed to make 10 products, while five were recalled.
The Waluj unit is in a similar predicament. It faces an import alert in the US and is under the the UK regulator’s scrutiny. Wockhardt expects a Rs 550-crore annual hit as a fallout of the import alert on this unit.
In October, the UK’s health regulator had imposed restrictions on import of drugs made at another unit, in Kadaiya, Nani Daman, for violation of norms.
Daljeet S. Kohli, research head at IndiaNivesh Securities, says Wockhardt will now face a double squeeze. Even as earnings from the US dwindle, it will be forced to spend more on remedial action. Profits will take a hit, he added since the US and the UK account for more than half of Wockhardt’srevenue and the company faces regulatory action in both markets.
In the past the company had enlisted the services of US-based Lachman Consultants to formulate a comprehensive response.
Wockhardt founder Chairman Habil Khorakiwala had told mediapersons about two months ago that the company was looking to shift US-bound products from the troubled Waluj unit to its plant in Shendra. New product application filings would also be made from there, he had added. But all this will take at least 18 months, said an analyst tracking the company.