Key Sun Pharma drugs to bid Halol goodbye

Halol plant is key for Sun Pharma and contributed in high single digits to its US sales

Sun Pharmaceutical Industries plans to shift production of key products from its Halol (Gujarat) factory to other facilities, following a weak December quarter which saw nearly five per cent drop in net profit.

Halol is important for the company and contributed in high single digits to its US sales before it was issued a warning letter from the regulator there in December 2015. No new products have been approved from the plant by the US Food and Drug Administration since September 2014.

The regulatory action and consequent remedial measures has resulted in disruption of supply from the plant and this has hit the US business. Pricing pressure in the market also impacted its earnings.  The US accounts for about 45 per cent of consolidated revenue. US market sales grew four per cent to $507 million in the December quarter from a year before.

While the company's earlier thrust was on restoring compliance with FDA specifications at Halol, Managing Director Dilip Shanghvi said on Tuesday they now planned to transfer production of critical products to other facilities. 

He said remediation measures at Halol will continue for some quarters and they continued to update the FDA on a regular basis.

Following the adverse observations last December, brokerages had cut the profit outlook. Delay in resolution of the issues will result in lower profits in FY18, the latter had said.

Sun Pharma also said it was cooperating with a US Department of Justice investigation, under which several drug manufacturers were issued summons.