UPDATE: FDA seizes Caraco drugs over norms violation

In a major setback to Sun Pharmaceutical Industries - the largest Indian drug maker in terms of market capitalisation, the US Food and Drug Administration (FDA) has seized all medicines produced by Sun’s US arm Caraco Pharmaceutical Laboratories, for repeated violations of manufacturing standards.

US Marshals, at the request of the FDA, today seized drug products at the company’s Michigan facilities in Detroit, Farmington Hills, and Wixom. The seizure also included ingredients held at these facilities, said an FDA statement.

Up to 33 different drugs may have been seized by the US marshals, Reuters said.

The FDA said it will not allow Caraco sell drugs in the US until there is assurance that the firm complies with manufacturing standards.

Sun Pharma holds 76 per cent stake in Caraco, which it acquired in 2002.

Analysts said at least about 12 per cent revenues of Rs 4272 crore turnover Sun Pharma are at stake by the developments at Caraco. Apart from own products manufactured at the three plants, Caraco also markets drugs manufactured by Sun.

A New York stock exchange listed independent company , Caraco had a turnover of $337.2 million (Rs 1635 crore) in 2008-09, of which $112 million (Rs 543 crore) was from sale of own products and $225 million (RS1092 crore) from sale of Sun Pharma products. Caraco alone has approval to manufacture 42 products and another 29 are pending for approval.

“Future prospects depends on how quickly Caraco is able to meet the cGMP standards”, said Ranjit Kapadia, vice president, institutional research with HDFC Securities.

Between Sun Pharma and all subsidiaries, 71 products are sold in the US and another 108 products are waiting for regulatory clearance, as of March 09.

Last year, the FDA had banned about 30 drugs manufactured by leading Indian drug maker Ranbaxy, for violation of manufacturing standards at Dewas and Panota Sahib manufacturing facilities in India. One of the manufacturing facilities of Lupin also received warning letters from the FDA  for manufacturing violations.  

“This action follows Caraco’s continued failure to meet the FDA’s current Good Manufacturing Practice (cGMP) requirements, which assure the quality of manufactured drugs,” said the US drug regulator.

The company was warned about its manufacturing problems in October last year and a repeat inspection in May also had found unresolved violations, such as poor control of raw materials, processes, data management and higher- than-normal variability in tablet manufacturing processes.

In March, Caraco was forced to recall its entire production of its brand Digoxin, a drug product used to treat heart failure and abnormal heart rhythms.