Indian firms in the line of global fire

UK imposes restrictions on Wockhardt's Daman unit

In yet another setback for an Indian pharma company abroad, Wockhardt’s manufacturing plant in Kadaiya, Daman, has come under the scrutiny of the UK health regulator. This is the company’s third facility to face regulatory heat within a space of a few months. Wockhardt, which recently restructured its debt to set its house in order, is among a string of drug companies to face action from international regulators in recent times.

After it announced the UK’s health regulator — the Medicines and Healthcare Products Regulatory Agency (MHRA) — had withdrawn the good manufacturing practice (GMP) certification for the Kadaiya plant, the company’s shares crashed more than five per cent on the BSE to hit Rs 455 apiece. The scrip closed at Rs 458 on the NSE, down 4.3 per cent from its previous close.

While withdrawing the previously-issued GMP certificate to the company’s manufacturing facility at Kadaiya, MHRA decided to issue a restricted GMP certificate. Under this, products can be manufactured at a plant to avoid shortage of medically-essential products.

At the Kadaiya plant, Wockhardt manufactures tablets for Europe (not exported to the US). “The impact on the existing business will only be known once the company receives further communication from UK MHRA,” a Wockhardt statement said.

Ranjit Kapadia of Centrum Broking said: “There are more sellers for Wockhardt stock nowadays. Though MHRA actions may not have much impact on the company’s revenue (revenue from UK is much lower than from the US), such actions affect its image and reputation among investors.”

Of the company’s Rs 5,610-crore revenue, the US market accounts for about Rs 2,900 crore, while UK sales stand below Rs 1,000 crore. Wockhardt’s international business, primarily the US and UK, constituted about 83 per cent of its total revenues in 2012-13. The company had received its first blow in July after an import alert was issued by the US Food & Drugs Administration (FDA) and UK MHRA on its Waluj plant in Aurangabad. On July 11, the MHRA said it had told Wockhardt to recall all unexpired stock of 16 products that had been manufactured at Waluj.

Just last week, MHRA had withdrawn its earlier GMP certification for Wockhardt’s Chikalthana factory, where the FDA had earlier reported quality concerns. That plant makes metoprolol, a generic version of the heart pill Toprol-XL sold by AstraZeneca Plc. Its Chikalthana plant generated sales of about $280 million in 2012-13.

Then, Wockhardt had estimated a one-time impact of about £1 million on account of a recall of certain products produced at the Chikalthana plant from the UK market. Though the company was asked to recall five drugs, it was allowed to manufacture and supply products critical to public health.

In India, the US and Europe, Wockhardt owns 14 manufacturing facilities that are US FDA, UK MHRA and EMEA -compliant. Its plants in India include Waluj, Chikalthana and Shendra (Aurangabad); Bhimpore and Kadaiya (Daman); and Ankleshwar and Baddi (Himachal Pradesh). In addition, it has facilities in the US, UK and Ireland.

The Waluj and Chikalthana plants, both under regulator scrutiny, are major suppliers to the US and UK markets. Its Bhimpore plant supplies tablets and capsules to the UK while the one at Baddi sells liquids and suspensions to the US. Its export-oriented unit for injectibles in Aurangabad had in April received Form 483, which is issued when US FDA inspectors believe a facility has violated the US rules.

Last month, the US drug regulator had blacklisted Ranbaxy Laboratories’ Mohali plant, stopping supplies to the US. Since 2008, several facilities of Ranbaxy, including Dewas, Paonta Sahib and Mohali, have come under the scanner. Earlier this year, the company had also pleaded guilty in the US of fraudulent activities and agreed to pay a penalty of $500 million to US authorities.

According to a recent study by CphI, during January 2010-June 2013, about 66 companies, such as Ranbaxy, Novartis, Sanofi Aventis, Merck KGaA and Wyeth, had received warning letters from US FDA. In 2012, 12 per cent of these were received by Indian companies, which account for 40 per cent of drug master files (DMFs; for selling drug ingredients) and 37 per cent of abbreviated new drug applications (ANDAs; for selling formulations).

However, industry experts argued these regulatory moves were not targeted specifically at Indian companies. DG Shah, secretary-general of the Indian Pharmaceutical Alliance, the largest body for Indian pharma companies, said: “The adoption of progressively higher standards of safety and quality has led to a greater focus on data integrity and GMP compliance, but the pharmaceutical industry’s lack of awareness and inadequate appreciation of these continually evolving standards has resulted in many companies failing to meet requirements.”
REGULATORY SCALPEL

• May 14: US FDA issues import alert on Waluj plant for not meeting manufacturing norms
• Jul 11: Asked to recall 16 products manufactured at Waluj plant from UK market
• Jul 18: US FDA issues warning to Waluj plant
• Oct 17: Asked to recall 5 brands manufactured at Chikalthana plant from UK market
• Oct 21: UK MHRA withdraws good manufacturing practices approval for plant in Kadaiya, Daman

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