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Sun Pharma Gets Three Observations From U.S. FDA For Halol Plant

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Sun Pharmaceutical Industries Ltd. said that the U.S. drug regulator issued a Form 483 with three observations after its inspection of the Halol facility in Gujarat.

The company is committed to addressing these observations and will submit a reply to the Food and Drug Administration within 15 days, India’s largest drugmaker said in an exchange filing.

“The company remains committed to working closely with the U.S. FDA and continues to enhance its Good Manufacturing Practices compliance on an ongoing basis,” it said. The inspection was conducted between Feb. 12. and Feb. 23.

Shares of Sun Pharma rose as much as 5.6 percent to Rs 571.8 after the announcement.

The only positive is that the number of observations have come down to three from nine earlier, Centrum Broking analyst Ranjit Kapadia told Bloomberg News. “We still need details on these three observations, how serious they are, before making further comments,” he added.

A zero observation scenario was unlikely, given the size of the facility, HDFC Securities said in a note.

“While Halol is crucial for Sun Pharma’s generic business going forward, it currently contributes in the low singe-digits to the overall top-line,” it said. HDFC Securities also added that further evaluation would require knowledge on the nature of the three observations.

Also Read: Sun Pharma’s Fortunes Are Tied To This, For Now

Why Halol Matters

In December 2016, the FDA had issued a Form 483 for the Halol facility with nine observations. That had followed a December 2015 warning letter preventing the company from making fresh filings.

The resolution for Halol unit is crucial as generic drugmakers have been cutting prices in the U.S. amid fierce competition. A clearance will unlock several complex generic filings and allow the company to ramp up existing products.

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