USFDA warns Sun Pharma for violating manufacturing standards

Country's largest drugmaker Sun Pharmaceutical Industries said it had received a warning letter from the US Food and Drug Administration for violating manufacturing standards at its Halol plant in Gujarat.

Analysts looking at the developments believe the warning indicates the agency is not satisfied with remedial process taken by Sun Pharma despite the company claiming the remediation process was "on track".

They also said the move could hurt the company as the period of uncertainty now gets prolonged and the normalisation process could now take even longer. This is bad news for the company because Halol is one of the important facilities for Sun Pharma.

This plant was being leveraged for many of its new and high margin products (read: injectables and eye drops for example), for instance, Lipodox, a key ovarian cancer drug.

As actual contents of the warning letter are yet to be disclosed, analysts are keen to know what USFDA expects the company to do now. They believe Sun Pharma may have responded to the USFDA inspection observations with some large scale remediation plan and has put in place a remediation process with significant investments into automation and in training to enhance its quality systems and has also engaged external consultants.

While no one is able to quantify the damage or the extent to which there could be any incremental hit, if any now, analysts feel it is certainly a very major area of worry for the company.