Sun Pharma faces US import ban, shares dip
Shares of Sun Pharmaceutical Industries on Thursday fell by over 5% after the US Food and Drug Administration banned import of drugs from the company's Karkhadi facility in Gujarat for violation of manufacturing norms.business Updated: Mar 14, 2014 01:00 IST
In a fresh setback for India’s pharmaceutical export industry in a series of incidents involving the US, Washington’s Food and Drug Administration (FDA) has slapped an import ban on Sun Pharmaceutical Industries’ plant at Karkhadi in Gujarat. The move sent the Mumbai-based drug maker’s shares down 5% to Rs 574 on the BSE on Thursday.
After Ranbaxy Laboratories, Claris Lifesciences and Wockhardt, Sun Pharma has become the fourth Indian pharma company to face an import ban by the US regulator in the last decade in the backdrop of an intellectual property row between the two nations on use of patents for cheap drugs.
Ranbaxy, now controlled by Japan’s Daiichi Sankyo, is India’s largest drug maker by sales, while Sun Pharma is the leader in terms of market capitalization.
On Wednesday, a Sun Pharma facility was put on the FDA’s "red list", meaning its products can be detained in the US without physical examination. Usually, the reason cited for such a detention is the failure to adhere to good manufacturing practices but the FDA website notification that announced the import crackdown did not give reasons for the ban.
"This import alert was issued by the USFDA as a follow-up to the last inspection of the facility, during which some non-compliance of current good manufacturing practice regulations were identified," Sun Pharma said.
The company said that it has taken corrective steps to address the observations made by the regulator, adding the financial impact of the ban on the plant, which makes antibiotic cephalosporin, would be ‘negligible’.
"The contribution of this facility to Sun’s consolidated revenues is negligible," it said. The plant accounts for less than 1% of its consolidated revenues.
"The company has well diversified manufacturing infrastructure to cater to the US markets, which contribute 54% of its sales in financial year 2013," said said Sarabjit Kour Nangra, pharma analyst at Angel Broking.