Duvvada unit audit: Dr Reddy's to launch corrective plan post verdict

German regulators made 6 major observations on the facility

Days, after the US Food and Drug Administration(US FDA) slapped a Form 483 against the Indian drug major Dr Reddy's Laboratories after completing the inspection of its Duvvada facility in Vishakhapatnam, the pharma major was dealt a second blow as German regulatory authorities made six major audit observations for the same plant.    

"On September 7, the Regulatory Authority of Germany (Regierung von Oberbayern), concluded an audit of our formulations manufacturing facility in Duvvada, Vishakhapatnam with zero critical and six major observations. Products manufactured at the facility are not currently exported to the European Union. The company will be submitting a corrective and preventive action plan(CPAC)," said Dr Reddy's in a filing on Friday. However, it has not revealed the nature of these observations.

The auditor has, on its part, said that it would issue the EU-GMP certification for the said unit only after the regulators approve the firm's corrective action plan. Following regulatory approval, certification would be extended up to November 2018. 

To ensure compliance levels at the Nuvvada facility, a second review would be conducted by regulators in November, next year.

Earlier, the US FDA had made 13 observations- the highest in terms of number- after Dr Reddy's requested for re-inspection of the Duvvada manufacturing unit.

This is the second instance when a Dr Reddy's manufacturing plant has fallen short of meeting quality standards.

Last Month, the German regulatory body refused to renew the compliance certificate of Unit 2 at Bachupally in Hyderabad, thereby, halting exports to Europe.

Even though the development might not have any major financial implication for the company, it has raised doubts regarding the extent of remedial measures undertaken by Dr Reddy's after the US FDA pointed out several serious deviations in compliance to current good manufacturing practices (CGMP) in at least three of its manufacturing units. Duvvada facility was identified as one of the defaulting units in this respect.

Dr Reddy's scrip fell more than 3 percent in the intra-day trade on Bombay Stock Exchange or by Rs 73.90 to Rs 2,150 on Friday, loosing some of the gains it had made after hitting a 52 week low of Rs 1,901 in the past one month.

Analysts have already raised concerns over the unusually long time being taken for setting the things right in a manner that would meet the expectations of the overseas drug regulators.

The compliance issues, which took the company's sheen away by impacting its business and the product launches for almost 2 years, threatened to become chronic with the regulators issuing fresh observations even after the company completed the corrective steps based on the previous action plans.

As there was no closure in sight for the company's woes on regulatory front, it is attracting fresh litigations like the class action lawsuit filed by an US firm last week, further denting the company' public image.