Alkem's Daman plant clears FDA hurdle, gets establishment inspection report

Alkem Laboratories' Daman plant cleared the inspection by the US drug regulator and received an establishment inspection report (EIR) on Tuesday. In March the US Food and Drug Administration (USFDA) had issued a form 483 containing 13 observations to the manufacturing facility at Amaliya, Daman, five of them repeat from 2016 inspection. 

The Daman facility getting EIR is significant as it contributes nearly 50 per cent of Alkem's US sales and around 60-70 per cent of Alkem's future filings would come from this facility. It makes tablets, capsules and dry syrups. 

USFDA had conducted a surprise audit at the plant between March 19 and 27, and issued a form 483 containing 13 observations. The company had subsequently submitted detailed corrective and preventive action (CAPA) plan to the regulator. The inspection has now been closed by the USFDA. 

India Infoline said, "In line with our expectations, Alkem has received establishment inspection report at its Daman facility. The plant had received 13 observations at this facility in March 2019 USFDA inspection with six repeat observations. Most observations were of routine in nature and there was no data integrity issue." 

The brokerage firm further added that the market was expecting further adverse action (warning letter from the USFDA), however, this has "turned out to be pleasant surprise to the investors." 

US is only a small portion of Alkem's overall business, around 16-17 per cent of its overall turnover. IIFL said that the US business does not significantly contribute to the firm's profitability. Despite this the stock had corrected by almost 16-17 per cent post the observations. 
 

On Tuesday it went up by 7.65 per cent ending at Rs 2026.35 a piece on the BSE.