Dr Reddy's fails one more US FDA test

Company's shares fall 4.4% to Rs 2,720, a 31-month low

In another setback to drug major Dr Reddy’s Laboratories’ (DRL’s) remediation effort, its oncology formulations facility at Duvvada in Visakhapatnam has got a long and adverse rap from the US Food and Drug Administration (FDA).

This particular rap is termed Form 483. The FDA issues it when an inspection of a unit reveals various objectionable deviations from its rules and standards. It was issued (“it has 13 observations, which we are addressing,” the company said, without details) after a new audit of the plant in question that was concluded on Thursday.

This is the second unit of Dr Reddy’s that has failed to clear a re-audit after the company had invited the FDA to do a fresh evaluation of all its three facilities that were issued a warning letter in November 2015, over lapses in what are termed “Current Good Manufacturing Practices”.

The company recently announced that all the commitments as part of the earlier warning letter response had been completed. The latest observations will further prolong the regulatory scrutiny at these. 

Last month, the US regulator issued a Form 483 with three observations after completing an audit of the company’s Active Pharma Ingredient (API) making unit at Miryalguda, also in Andhra. After this, the API unit at Srikakulam in the state, last of the three facilities in question, will undergo the fresh audit. 

A company is required to respond to a Form 483 with a corrective action plan and then implement that expeditiously.

The warning letter had affected the revenue of DRL as Abbreviated New Drug Applications from these sites, for sale in the US, were put on hold.  The US market contributes more than half its total revenue, which was Rs 15,470 crore in 2015-16. In the US market, about half the revenue comes from new product launches.  

Last year, Dr Reddy's gave five responses to the FDA, on the remedial work at these units. The company also hired a leading global consultancy, Lachman, to perform independent product quality assessments and resolve the compliance issues at these units.