Alembic Pharma's injectables plant launch may face some delay

Company saw Form 483 with observations issued by US FDA for injectables plant in February

Vadodara-based Alembic Pharmaceuticals Ltd might see three to six months of delay in the launch of its new injectables plant after receiving Form 483 with observations from the US Food and Drug Administration (US FDA).

The company had been waiting for US FDA inspection for F2, F3 and F4 plants which will manufacture oncology injectables and oral solid dosages (OSDs), general injectables and general OSDs specifically for the regulated US market. While there is so far no clarity on inspection for oncology injectables and OSDs plant as well as general OSDs plant, the general injectables plant saw USFDA issue form 483 with some observations.

Form 483 is issued by US FDA on conclusion of an inspection in which the regulator has observed conditions that, in its judgment, may constitute violations of the Food Drug and Cosmetic (FD&C) Act and related Acts. Alembic Pharma had earlier stated that none of the observations were related to data integrity and were procedural in nature.

Now, according to R K Baheti, director-finance and chief financial officer of Alembic Pharmaceuticals Ltd, while the company has taken remedial steps and responded with compliances to the regulator, there might be a three- to six-month delay in the launch of its new injectables plant.

"The FDA visited and physically inspected the injectables plant. However, we got Form 483 with observations for which compliances have been sent now. We are hopeful that the remedial measures taken will now be followed by facility approval, after which one or two product approval may also come," Baheti told Business Standard.

The company, however, is yet to ascertain the status for facility approval for the other two plants in absence of an inspection schedule by US FDA. Earlier, the company and analysts were expecting the facility approvals to come by mid 2021 which could now see some delay.

Alembic Pharma currently runs three active pharmaceutical ingredients (API) plants, one formulations plant and one plant in Sikkim for the domestic market, along with three R&D centres with one each in Vadodara, Hyderabad and New Jersey. However, the three new plants that are awaiting facility and product approvals from USFDA have gained significance in recent times on account of other factors affecting Alembic's US business.

For instance, during the third quarter results, Alembic Pharma had posted a 10.2 per cent quarter-on-quarter (QoQ) and 2.1 per cent year-on-year (YoY) decline in US revenues to nearly $70 million. The US market, which contributes 75 per cent to Alembic's international formulations business saw the decline largely due to loss of account in sartans with increasing competitiveness in the market.  

Moreover, the decline in US formulations came despite APL launching seven new products during Q3 of FY'21. However, while a similar trend is expected in the fourth quarter of the current fiscal, analysts feel the next year might turn the tide depending on approvals for its new plants.

Earlier, a ICICI Securities report too had expected the plant approvals and capacity utilisation to improve US business for Alembic.

"We believe near-term (FY22-23E) earnings performance would be impacted by reducing sales of sartans in US, continuous investments in R&D and additional costs (Rs 400-500 crore annually) when new plants become operational. However, these costs would be absorbed over the medium term as approvals start and capacity utilisation," the ICICI Securities report had stated.

Once received, the facility and product approval for the three new plants will also boost Alembic Pharma's new product launches, especially for the US market.

"Every year we intend to launch 25-30 new product from all our plants put together. We intend to file for multiple new product launches from the new plants as well once approved," Baheti added.