US FDA warning on Mandideep facility may hit Lupin’s revenue

Mandideep is Lupin’s only plant manufacturing cephalosporins, which contribute about 45% of its total revenue.

Indian generic drug maker Lupin’s earnings from the US market is likely to take a blow as the FDA warned the company that no new product would be approved until it takes corrective action to address the deficiencies in the Mandideep manufacturing plant.

The US FDA had conducted an inspection at Lupin’s manufacturing facility at Mandideep, Madhya Pradesh in October – November last year. The FDA inspection found several deficiencies in the Good Manufacturing Standards  (GMP) standards set by the agency and issued Inspectional Observations also known as Form 483 listing all the deviations.

“The USFDA issued a warning letter for the cephalosporin (antibiotic compounds) facility of the Mandideep plant (in Madhya Pradesh). The facility was inspected in November 2008 for a routine GMP (good manufacturing practices) inspection. As a result, Lupin had received 15 procedural observations,” Lupin sated in a press release while announcing its fourth quarter results for the period 2008-09.

Lupin responded to the 483 observations informing the corrective course of action through a series of letters in the subsequent months. However, US FDA did not find Lupin’s responses satisfactory and issued a warning letter dated 7th May 2009, pointing out at least eight violations regarding the manufacturing process.

“The warning letter was issued to provide Lupin with an opportunity to submit additional documentation and explanation to a few selected observations where the FDA felt that the initial responses were inadequate and could be strengthened by further evidence of compliance with enhanced documentation practices,” the announcement said.

Lupin’s Mandideep facility makes involves both sterile and non-sterile pharmaceutical manufacturing and sterile active pharmaceutical manufacturing factories.

US FDA has cited Lupin’s failure to maintain production, control, or distribution records and failure to follow appropriate written procedures designed to prevent microbiological contamination of drug products to be sterile.

Lupin’s Mandideep facility also found to be lacking in controls to prevent contamination in defined areas regarding operations related to aseptic processing of products. The plant managers also failed to routinely calibrate, inspect, or check according to a written programme designed to assure proper performance of automatic, mechanical, or electronic systems.

The inspectors also found deficiencies in following written procedures describing the receipt, identification, storage, handling etc of drug product containers and closures and documentation of each significant step in the manufacture, processing and packing apart from their failure to investigate the failure of a batch or any of its components to meet any of its specifications.

Mandideep is the company’s only plant which manufactures its cephalosporin range of antibiotics, according to a Lupin presentation to its investors made in July 2008. Cephalosporins contribute about 45% of the company’s total revenue. Lupin sells 10 products and has one pending ANDA (abbreviated new drug application) from this facility.

Observers watching the industry, however, stand divided on the possible impact of  US FDA action on Lupin’s revenue targets in the coming quarters. Lupin may not be seriously hit even if US FDA slapped a temporary ban on importing and selling products made in Madideep, because all products maintain their approved status in US. Most of the large cephalosporin-based products for Lupin are already in the market and hence this development should not significantly impact growth.

And Lupin itself, maintains that its manufacturing will not be disrupted and it will continue to provide quality products to customers without interruption.”

While other would like to feel that an USFDA ban can take a toll on Lupin in the short and long time perspective. The warning letter will impact future approvals even as existing products continue to be sold, they argue.

Lupin’s generic and branded businesses in the US soared 74% to Rs1,256 crore in 2008-09.

Recently, Ranbaxy,  faced a ban from USFDA, after the agency found serious manufacturing errors in its Paonta Sahib, Himachal Pradesh facility. After an FDA audit, the company lost its ability to export dozens of meds into the U.S. That hit Ranbaxy’s top and bottom lines hard–it lost $155 million in the first quarter–and proved to be a severe drag on Daiichi’s (which acquired the firm last year) most recent results as well. The FDA action probably triggered even the outset exit of Ranbaxy CEO Malvinder Singh. Ranbaxy, along with Daiichi are still battling the case as the FDA probe is still ongoing.

Sun Pharma and Cipla Ltd are other Indian generic makers slapped with Inspectional Observations (Form FDA 483), of late.