Sun Pharma's product approvals at risk as USFDA labels Halol plant as OAI

Sun Pharmaceuticals Industries Ltd (Sun Pharma) on Sunday said that its Halol plant in Gujarat has been classified as 'Official Action Indicated' (OAI) by the United States Food and Drugs Administration (USFDA) after a December 2019 inspection.

OAI means that pending product approval from the facility could be withheld by the regulator. Earlier in December, the plant had been issued Form 483 by USFDA with eight observations. This  has escalated into an OAI classification.

"The OAI classification implies interalia that the USFDA may withhold approval of any pending product applications or supplements filed from this facility till the outstanding observations are resolved. The company continues to manufacture and distribute existing products for the US market, thereby not likely to have any adverse impact on current business from the facility," the company said in a filing with BSE on Sunday.

Committed to being current good manufacturing practice (cGMP) compliant and supplying high-quality products to its customers, Sun Pharma has said that it continues to cooperate with the USFDA and will undertake all necessary steps to resolve these issues and to ensure that the regulator is completely satisfied with its remedial action.

While the exact share of Halol plant in US exports is not known, analysts estimate its share in total revenues to be in high-single digits. Earlier in a post-earnings call, Sun Pharma's managing director and executive director Dilip Shantilal Shanghvi had told analysts that post a warning letter from USFDA, the size of dependence on Halol facility for US exports would have gone down.

As such, post USFDA observations in December 2019, the company was expected to spend considerably to ramp up procedures and facilities at Halol even as some observations would have required comprehensive explanations and responses by Sun Pharma.

For now, analysts feel not many new drug filings can be expected from Halol in near term even as future drug approvals from the plant becomes crucial.