For the second time this year, Wockhardt was on Tuesday banned from selling drugs to the United States by the US Food and Drug Administration (USFDA). The USFDA’s import alert, issued on the company’s Chikalthana manufacturing facility in Maharashtra, will mean a big hit to the firm’s bottom line since it makes Metropol, a big revenue earner.
Wockhardt did not disclose how many drugs were banned, but said in a filing to the exchanges on Wednesday that among those that cannot be exported is Metropol X — a product in the cardiovascular therapeutic segment — which reportedly contributes $140 million or roughly 14% to the firm’s total revenues and enjoys a margin of 50%.
Sales earned in the US market from drugs produced at Chikalthana were close to $40 million in Q2FY14. Total revenues earned from the US market in FY13 were R2,899 crore ($534 million approximately) to which the facility contributed around $230 million.
On May 24 this year, the USFDA had issued a ban on the Waluj plant, also in Maharashtra, as a result of which revenues fell 26% year-on-year to $87 million in Q2FY14 in dollar terms and 19% in rupee terms.
The import alert on Chikalthana comes on the back of the UK health regulator withdrawing the good manufacturing practices (GMP) certificate issued to the plant in October this year and subsequently recalling five prescription drugs. Sales to the UK are estimated at about £12 million, of which about £9 million was adversely affected by the withdrawal and subsequent product recall.
The Wockhardt stock tanked 14% intra-day on Wednesday before closing at R430.15, down 8.9% on the BSE. The company has hired US-based compliance advisers Lachman Consultants to iron out its regulatory issues.
While there has been heightened scrutiny by overseas drug regulators of manufacturing facilities in India, these have translated into fewer import alerts compared with those for other countries.
While 9% of USFDA-approved manufacturing units in India have faced an import ban, the number for Mexico is as high as 74%, while for British and Canadian USFDA-approved facilities, it is 30%.
India has the second-highest number of USFDA-approved