Dr Reddy’s Laboratories has got three Form-483 observations from the US Food and Drug Administration (USFDA) for its Miryalaguda active pharmaceutical ingredients (API) plant in Telangana. While the company did not explain the nature of these observations, the Miryalaguda plant is one among the three plants for which the company received warning letter in November 2015. Incidentally, the company has earmarked about $40 million investment as part of remediation costs to be spent over an year and address the quality issues.

“The audit of our API manufacturing plant at Miryalaguda, by the US FDA, has been completed today (February 21, 2017). We have been issued a Form-483 with three observations, which we are addressing,” the company said in a stock exchange filing. The company did not give details on nature of the observations. The FDA issues a Form-483 if its investigators spot any conditions that in their judgment may constitute violations of the US Food Drug and Cosmetic (FD&C) Act and related Acts.

The other two facilities that were issued a warning are an API plant at Srikakulam and an oncology formulations plant at Duvvada in Visakhapatnam. Both plants are located in Andhra Pradesh. While the company did not specify the nature of these observations, analysts tracking the development claimed that these could be minor observations and said that the audit at Srikakulam plant is very critical for the company.

On November 5, 2015, Dr Reddy’s received a warning letter from the USFDA for alleged violations in manufacturing standards for its active pharmaceutical ingredient (API) plants at Srikakulam in Andhra Pradesh and Miryalaguda in Telangana and an oncology formulations facility in Visakhapatnam (Andhra Pradesh).

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According to few estimates, the three plants put together were contributing about 15% of total sales, in addition to several key generic and drug master filings (DMF) in the US. In a presentation at the JP Morgan Annual Healthcare conference in San Francisco in mid-January, Dr Reddy’s had said that “all the commitments as part of warning letter response have been completed and the three plants will be re-inspected by the US regulator by end of March.”

Last year, the company went for share buyback and spent R1,570 crore to repurchase nearly five million shares. The company’s buyback proposal came when it received adverse observations from the USFDA with regard to violations in manufacturing practices at three of its plants in Telangana and its stock took a gradual hit.