U.S. Drug Regulator’s Curbs On Facility To Have Lower Impact Than Feared, Says Divi’s 

The U.S. drug regulator’s decision to bar sale of drugs made at Divi’s Laboratories Ltd.’s Visakhapatnam plant will have a much lower impact than feared on its revenues.

While exports to the U.S. from Unit-II at Visakhapatnam contribute 22-23 percent of the total revenue, 10 product exemptions granted by the U.S. Food and Drug Administration (FDA) would limit the company’s revenue risk to 5 percent, Kishore Babu, chief financial officer at Divi’s Labs, said in a conference call with investors and analysts. The company plans to approach the FDA for more exemptions.

Divi’s Labs has filed its first response to the observations made after an inspection in December 2016, and will submit one more by March 31.

The company awaits clarity on the reasons for the import alert, which bars it from selling products made at the facility in the U.S. market.

The company has appointed consultants and its priority is full compliance with FDA’s current good manufacturing practices and to overcome deficiencies immediately, Babu said.

The company has informed its customers and “right now they are satisfied with the way in which we are working with our remediation efforts”, he said, denying to comment on the risk of losing customers after the import alert.

Its Unit-I at Visakhapatnam, another facility that makes products for the U.S. market, could be up for an FDA inspection this year, Babu said. Unit-I was last inspected in June 2014. There is a fair level of preparation for any possible inspection, he said.

The FDA inspected Unit-II between November 29 and December 6 and issued five observations. This was followed by an import alert on March 20.

The Divi’s stock gained as much as 3.46 percent to Rs 645 before cooling off to Rs 635 as of 2:40 p.m.