Sun Pharma slips over 2% after USFDA issues observations for Halol facility

Shares of Sun Pharmaceutical Industries slipped over 2 per cent lower at Rs 860.05 on the BSE in Tuesday's intra day trade. The decline comes after the company receieved 10 observations from the United States Food and Drug Administration (USFDA) after inspection of Sun Pharma's Halol (Gujarat, India) facility.

In the past five days, the stock has fallen over 5 per cent. In comparison, the S&P BSE Sensex declined 3.75 per cent during the same period. Earlier, the stock had hit a 52-week high of Rs 966.90 that it had touched on April 29, 2022, whereas, slipped to 52-week low of Rs 652.75 on 18 June, 2021.

The Halol facility was classified as ‘Official Action Indicated (OAI)’ in March 2020, and was awaiting re-inspection from the US regulator. OAI means that the regulator expects more corrective actions should be taken by the company for that facility. However, due to the coronavirus (Covid-19) pandemic related travel restrictions, the re-inspection got delayed, and now the USFDA has issued Form 483 with observations, which is an improvement over the OAI status.

Given this, the USFDA has conducted a Good Manufacturing Practices (GMP) inspection of the pharma giant's Halol facility from April 26 to May 9, 2022.

Meanwhile, the company notified to stock exchanges that it will submit a response soon to the US drug regulator over the 10 observations.

"The company is preparing the response to the observations, which will be submitted to the USFDA within 15 business days. The company is committed to addressing these observations promptly. The company remains committed to working closely with the USFDA and continues to enhance its GMP compliance on an ongoing basis," said the company in an exchange filing.

Sun Pharma's Halol facility (one of the plants used to manufacture complex drugs for US) has been in trouble since 2015. Later, the USFDA had changed the site's designation to voluntary action needed (VAI) in 2018, after the company undertook corrective measures. However, after the regulator inspected the site in 2018 and 2019, issues started to crop up.

Sun Pharma manufactures and distributes products to the US from this facility. An OAI status, however, implies that the FDA may not allow new approvals from the Halol facility till the status is changed.