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Sun Pharmaceutical's key plant cleared by US FDA after quality concerns

Move to help Indian drug maker launch new products from Halol

The resolution of issues at the Halol plant -- Sun's largest facility supplying to the U.S. market -- will help boost the Mumbai-based company's sales in the largest drug market in the world.   © Reuters

MUMBAI (NewsRise) - The U.S. drug regulator cleared Sun Pharmaceutical Industries' key plant in western India that had been reeling under quality concerns for two and a half years.

The move will pave the way for the nation's largest drug maker to launch new products from the Halol plant in Gujarat state.

The company, backed by billionaire Dilip Shanghvi, received the Establishment Inspection Report from the U.S. Food and Drug Administration after an inspection between Feb.12 and Feb. 23, Sun said in a statement on Tuesday. The FDA concluded that the inspection is now closed, and the issues contained in the warning letter issued in December 2015 have been addressed, it said.

"We remain committed to following the highest levels of quality at all our manufacturing facilities globally," Shanghvi said in the statement.

The resolution of issues at the Halol plant -- Sun's largest facility supplying to the U.S. market -- will help boost the Mumbai-based company's sales in the largest drug market in the world. It will also give a fillip to Sun's research arm Sun Pharma Advanced Research, which depended on Halol to make two of its key drugs to treat Glaucoma and seizures.

According to Motilal Oswal, the resolution of Halol issue is critical for Sun, as "it would provide visibility on key approvals." The brokerage expects the resolution to help expand Sun's sales in the U.S. by $100 million.

The Halol plant, under the FDA lens since 2014, previously accounted for about 25% of the drug maker's U.S. sales. It now contributes barely 15%. The FDA warning letter barred the company from making any fresh filing of drug applications from the unit, which manufactured key injectable drugs.

In the past three and a half years, the plant received 23 observations about breach of quality standards after multiple audits. Last week, the FDA said it assigned Halol Voluntary Action Indicated status, suggesting the plant would not require any re-inspection.

Most Indian drug makers are grappling with regulatory issues amid rampant violation of FDA norms on manufacturing standards. In the past, the regular issued warning letters to second-ranked Dr. Reddy's Laboratories and third-largest Lupin, citing quality issues at some of their plants.

Meanwhile, Sun continues to struggle with regulatory and quality control issues at Ranbaxy's local plants, since acquiring the rival from Japan's Daiichi Sankyo in 2014. Ranbaxy has four plants in India that are banned from selling to the U.S.

Shares of Sun rose 1% in Mumbai trading, while the benchmark S&P BSE Sensex added 0.1%.

--Dhanya Ann Thoppil.

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