The US Food and Drug Administration (USFDA) is conducting a surprise inspection of Dr Reddy\u2019s Laboratories\u2019 Visakhapatnam plant. The inspection, which started on Tuesday, is expected to continue till the end of the week. The surprise check by the regulator is at the chemical technical operation (CTO) unit VI, which manufactures both active pharmaceutical ingredients (APIs) and bulk drugs. When contacted, a DRL spokesperson confirmed the developments: \u201cWe are still awaiting the report from USFDA and cannot comment on any issues,\u201d the spokesperson said, without explaining the reasons for the sudden inspection on the unit. \u201cThe inspection may continue till the end of the week and we are confident that we have maintained high quality standards including strict compliance,\u201d sources in the know said. The unit, set up in 1990, has a reaction volume capacity of over 570 KL, and is USFDA-inspected and ISO-9001 certified. \u201cWhile Indian pharma companies have been meeting the good manufacturing practices (GMPs), the USFDA has put forth stringent norms to maintain quality of products as well as operations, record maintenance and housekeeping,\u201d a pharma analyst said. To recall, there were sudden inspections recently on Ranbaxy, Wockhardt and Sun Pharma manufacturing facilities as well. A recent report from Standard & Poor\u2019s (S&P) said that growth for Indian pharma companies was likely to get a boost with countries increasingly focusing on affordable health care. However, failure to comply with the stringent quality requirements of developed markets was a key risk. Compliance with regulations was a key requirement for Indian pharmaceutical companies to realise their growth potential, the report notes. Failure on this front would seriously hurt credit worthiness. It could lead to disruptions in production, import bans, remediation costs, and\u2014 above all \u2014 reputational and litigation risks, Vishal Kulkarni, Standard & Poor's credit analyst said. Similarly, an India Ratings report said that Indian pharmaceutical manufacturers will face increased USFDA inspections. This is given the US\u2019 increasing dependence on Indian pharmaceuticals manufacturers. India has the highest number of USFDA-approved facilities outside the US and Indian registration applications have been rising every year. India also accounted for 40% (by volume) of US generic drug imports in 2013. The country\u2019s exports to the US have also been growing steadily. The USFDA had issued import alerts against 21 Indian manufacturing facilities during 2013, including those of Ranbaxy Laboratories and Wockhardt. In 2014 so far, the FDA has issued import alerts against two Indian facilities, including an active pharmaceutical ingredients manufacturing facility of Sun Pharmaceutical. A total of seven Indian facilities were under an import alert in 2011. The figure was nine in 2012 and 32 in March 2014, the highest ever. An import alert bans all exports of pharmaceutical products from the subject plants into the US and renders all the stocks of the impacted production batches unsaleable in the US market. Import alerts issued against Indian plants in 2013 accounted for 49% of the total 43 such imports alerts issued by the USFDA worldwide. Large pharma companies will spend more effort and resources to improve compliance, resulting in a lower number of regulatory actions, the report added. An industry source said there was a need for prior intimation before inspection of a plant. \u201cEarlier, there used to be prior intimation but now there are only surprise checks even while both Indian and the US governments agreed for joint participation involving the Drug Controller General of India (DCGI) during the inspection process. Both regulators have to be associated during any inspection,\u201d the industry source said on the condition of anonymity.