Issues at Sun Pharma's Halol plant may take 3-4 months to resolve, say analysts

India's leading pharmaceutical company Sun Pharma's manufacturing quality issues at its troubled Halol plant in Gujarat are continuing and may require at least three-four months to resolve.    

The US Food and Drug Administration (USFDA) inspected the plant between December 3 and 13 and issued a Form 483 (inspection report) with eight observations. Last week, Sun Pharma had informed the stock exchanges that it was in the process of preparing the response to the observations, which would be submitted to the USFDA within 15 business days.

Experts say that these observations are relatively not so serious and are unlikely to lead to a warning letter or export ban. The observations relate to complying with the Good Manufacturing Practices (GMPs) specified by the USFDA. "One of the observations is related to sampling procedure and areas that should be sampled at the end of the filling process. While this observation has been repeated again and its resolution is important for future product approvals, we expect it to be resolved in a timeframe of three months," said analysts with Motilal Oswal in a research report.

Other observations are related to Out-of-specification (OOS), establishing and implementing controls to monitor environment data, establishing scientifically sound test procedures to assure representative sample vials are taken for analysis, inadequate documentation of online particle count sampling location risk analysis of filling room, control procedures to monitor variability in characteristics of in-process and finished products, and timely implementation of Corrective actions on critical alarms (CAPA).

Analysts said they expect Sun Pharma to resolve the issues highlighted within three-four months, particularly the issue related to sampling at the end of the filling process that is important for future filings from the plant.

Sun Pharma's issues with Halol, one of the most important plants for manufacturing complex drugs meant to the US, was started in 2015, as the FDA issued a 'warning letter' subsequent to an inspection in September 2014. At that time, analysts said Sun Pharma was getting 10-15 per cent of its sales from products manufactured at this plant.

Sun Pharma took the corrective action and subsequently, Halol was inspected in December 2016, with the USFDA maintaining OAI (official action indicated) or significant objectionable conditions or practices. Action must be taken to address the issues. The USFDA again inspected the Halol site in February 2018 and changed the classification of the site to VAI (voluntary action indicated). Thus, it took almost four years, from September 2014 to June 2018, to resolve the issues found in the warning letter. Thereafter, the site had been inspected successfully in August 2018, December 18 and June 2019. Now the problems have again cropped up.

Some analysts said that the resolution at the facility would help Sun Pharma's revenues to go up by $100 million a year from products manufactured at the plant. Motilal Oswal analysts said that the contribution from the Halol site to consolidated sales of Sun Pharma has declined given the price erosion in the base business, lack of approvals until June 2018 and lack of potential approval till date, though the site is important from the perspective of sterile products.

Also read: Sun Pharma posts Rs 1,064 crore net profit in September quarter, India sales up 35%

Also read: Britain's AstraZeneca to distribute Sun Pharma cancer drugs in China