USFDA's warning letter continues to haunt Dr Reddy's even after 3 years

Exactly three years ago on November 5, 2015, Indian drug major Dr Reddy's Laboratories Limited had received a Warning Letter from the US Food and Drug Administration (USFDA) for the poor state of affairs in three of its manufacturing facilities. 

The close-out letter from the USFDA continues to elude the company even after three years of remediation in the wake of latest round of concerns raised by the FDA inspectors regarding its Oncology formulations facility at Duvvada in Visakhapatnam. 

The Mohali plant of Sun Pharma was the only other recent example that comes close to this situation. The USFDA had lifted the three-year-old import sanctions only in 2017 on the facility of erstwhile Ranbaxy, which became a part of Sun Pharma post-merger in 2015.

Dr Reddy's received the FDA warning letter for CTO Unit VI, an API plant located in Srikakulam district of Andhra Pradesh, CTO Unit V, also an API facility located in Nalgonda district of Telangana and the Unit-VII Oncology formulations plant at Duvvada.

In its eleven-page warning letter, the US drug regulator had cited 'significant violations of current good manufacturing practice (cGMP) regulations' besides a host of other deviations in the three plants. So far the company was able to resolve all the initial and subsequent observations only at Miryalaguda facility while the other two plants continue to remain under a scanner.

The latest Form 483 with 8 observations came as a clear setback for the company, which was hoping to complete the remediation without giving a scope for any more observations. "We have been issued a Form 483 with 8 observations, which we are addressing," the company informed the stock exchanges on October 30, 2018, without elaborating on the nature of the latest observations. Each time the company had sought reinspection after addressing the previous concerns at these manufacturing plants, the USFDA inspectors came up with a fresh round of observations in the past three years.

Given the time-consuming procedures of remediation and the reinspection, it was unlikely that the company will be able to get a closure for its regulatory owes any time soon, according to the analysts. 

"A lot of times companies think that when FDA comes to re-inspect, they are only going to look at the systems that were cited in the Warning Letter. Many companies fall into this trap thinking that when FDA comes back, they are only going to verify corrective actions. This is just not true. FDA will focus some of the inspection on the corrective actions, but will also, generally, perform a full inspection. The issues identified in the Warning Letter may have been corrected, but new potential issues may be noted. While some of the issues may not warrant additional action, they may lead to a delay in lifting the Warning Letter," Linda Evans O'Connor, head of business process and regulatory at Lachman Consultants said in a note last year.

Discussing the impact of the warning letter in May this year, the analysts at HDFC Securities said that even if Dr Reddy's was able to complete the remediation activities by June-July, 2018 it was not possible to expect any lucrative approvals coming in from these two plants in the financial year 2018-19. Going by their assessment, the adverse plant reinspection outcome at Duvvada sterile injectables facility will only extend the wait for product approvals beyond FY19 on top of the import ban from the two facilities. It may be recalled that Dr Reddy's had filed 15-20 of the 110 pending ANDAs from these two facilities.