Six months after Mumbai-based Ipca Laboratories voluntarily stopped shipments from its Ratlam unit in Madhya Pradesh to the US, the US Food and Drug Administration has imposed a ban on certain drugs produced at the facility from sale within its markets.
On Friday Ipca said in a filing to the exchanges that four products were excluded from the ban. Despite the company’s pre-emptive step, its shares fell as much as 9% on the BSE, before ending with a loss of 8.6% at R639.15.
The unit, which produces active pharmaceutical ingredients (APIs), had been inspected by the US regulator for four days from July 14, 2014, and was issued a six-point Form 483, or an initial adverse observation report. Two of the observations pertained to “data integrity”, which the USFDA views seriously, according to analysts.
The company’s fiscal 2014 revenue has already taken a hit with revenue from the generic drugs business falling 4% year-on-year due to suspension of the Ratlam shipments, according to a JPMorgan report in November, 2014.
The company’s net total income for Q2FY15 was R789.31 crore, a decline of 7% year-on-year. Net profit slumped 53% to R61.3 crore in the same period.
Ipca had said in July that it had appointed US-based Lachman Consultants — which also advised Wockhardt on its compliance-related manufacturing issues — to advise it on tackling the problem. The company had said it will incur $1 million to resolve the discrepancies and the process would last around six months.
Analysts now say it would take at least a year for the company to resolve the import alert, which would continue to impact its US business. The company’s FY14 US generic sales stood at R225.8 crore, which according to an Ambit Capital report represented 7% of its consolidated revenue.
The company’s API exports in FY14 stood at R600.23 crore.
Ratlam also supplies APIs to the company’s formulation manufacturing plants for captive consumption. On September 19, Health Canada had asked Ipca to voluntarily stop API shipments to the country, citing the adverse observations noted by the USFDA in its July inspection. Canada represents 1% of the company’s sales.
Ipca’s Silvassa facility also received a five-point Form 483 in December after the conclusion of the inspection on December 19.