US FDA plant inspections seem to be coming back strongly after a two-year hiatus, going by the just-concluded inspection at Zydus Lifesciences on March 10 and a warning letter to Aurobindo earlier this year, in mid-January. FDA officials commented in February 2022 that FDA is keen on restarting inspections, including surprise inspections in India. FDA could be set for a busy year in India as the backlog of redressals from previous inspections and pending applications for plants and products become pressing. Earlier, the total number of US FDA plant audits for drug quality assurance in India peaked in 2019 at 239. Another 80 inspections were completed in January-March 2020 prior to Covid and slid to 5 inspections in 2021.

The surge in audit inspections could be periodic or could also be linked to evolving standards in manufacturing. In such waves, ‘OAI classification’ of the inspected plants rises from 5-6 per cent in a normal year to a high of 26 per cent. OAI – Official Action Indicated — is the least favourable outcome from an inspection. VAI – Voluntary Action Indicated, and NAI – No action indicated are the better ones.

Who’s most vulnerable now

Most pharma companies should expect inspections across plants given the two-year lull, but an analysis of prior inspections and outcomes shows that Sun Pharma, Dr Reddy’s, Cipla and Biocon could be at lower risk, while Aurobindo and Lupin could be more vulnerable.

Aurobindo received a warning letter for its Unit 1 in January 2022 after receiving an OAI status in November 2021. Lupin received a warning letter in June 2021 for its Somerset, New Jersey, facility. In addition, its Manideep Unit 1 received a warning letter in September 2019. Three other Lupin plants are in OAI status as well, having received the status two years earlier.

Regulatory action is expected only in OAI classification, under which new product approvals from the plant may be delayed. A warning letter is issued on non-satisfactory addressal of the issues raised in the inspection. This will usually have significant impact on the company’s prospects. This also leads to a costly and time-consuming remediation process. On the other hand, a satisfactory addressal of the issues raised results in a closure through the putting out of an Establishment Inspection Report’.

Aurobindo’s sterile injectable facility Unit 4 received a VAI status, but since it’s been two years since the outcome, the sterile facility should expect an inspection as well. In addition, Unit 7 and Unit 9 received OAI in January 2020 and May 2019 respectively, and Unit 11 received a warning letter in June 2019. All these are ripe for further audits as inspections make a comeback.

Relatively better off

Biocon faces regular inspections triggered by new product approval process, but it fares better usually. Sun Pharma’s Halol plant got an OAI classification in March 2020, but, over the years, Sun Pharma’s reliance on the plant has come off. More importantly, its reliance on plain generics is also decreasing. Cipla managed to maintain a relatively clean record till its Goa plant received a warning letter in February 2020. But similar to Sun Pharma, Cipla’s reliance on Goa may not be much, thus cushioning the impact.

How things pan out for Zydus Lifesciences and Dr Reddy’s needs to be watched. Zydus Lifesciences received three observations for its injectable facility at Jarod, Gujarat, most recently. The all-important plant at Moraiya continues to be under warning letter and its clearance is crucial for the company’s 50+ launches plan in FY23 and beyond, in the US. For Dr Reddy’s, given that it is highly reliant on US generics, the plant’s operational status is of crucial importance to the company.

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