Lupin, Alkem Face 'Higher Risk' Of U.S. FDA Inspections, Cipla Least At Risk: Jefferies
An employee holds Ramipril capsules for a photograph inside a coating unit at the Lupin Ltd. pharmaceutical plant in Salcette, Goa, India. (Photographer: Dhiraj Singh/Bloomberg)

Lupin, Alkem Face 'Higher Risk' Of U.S. FDA Inspections, Cipla Least At Risk: Jefferies

Pharmaceutical product recalls in the three months ended March jumped to the highest in four quarters, according to Jefferies, raising the risk of inspections by the U.S. Food and Drug Administration.

10 product recalls from Alkem Laboratories Ltd., Alembic Pharma Ltd., Dr. Reddy’s Laboratories Ltd., Lupin Ltd., Sun Pharmaceutical Industries Ltd., and Zydus Cadila, have been reported in the January-March period, the research firm said in a note. The reasons, according to Jefferies, include mislabeling, mix-up in packaging to the presence of impurities, and failure of dissolution specifications, among others.

All the recalls, the report said, were classified as Class-II or Class-III, which are relatively benign compared to a Class-I recall.

Product recalls can be a leading indicator of facility compliance risk, especially in absence of regular U.S. FDA inspections. We estimate that Lupin and Alkem are at higher risk when the FDA inspections resume while Cipla faces least incremental risk.
Jefferies Note

Product recalls provide important clues to the FDA inspectors on where to start looking for manufacturing deviations. Specific data around problematic batches can throw light on site-wide and even firm-wide manufacturing practices, Jefferies said. “Based on recall data, Daman (Alkem), Pithampur unit I, II, III (Lupin) are the sites that are likely to be inspected on priority once the FDA resumes inspections. Since June-2019, Alkem Daman has seen six recalls, while Lupin Pithampur (all units combined) have seen 15 recalls.”

Jefferies expect the FDA inspections to fully resume in one-two quarters as Covid-19 vaccination in the U.S. is expected to ease travel restrictions.

“The U.S. FDA inspections have resumed from early 2021, albeit at a small scale and using India office staff. Priority areas for the FDA would include facilities currently under warning letter/OAI (official action indicated — bar on getting new approvals for exporting to the U.S. market) which have completed remediation and a closer examination of facilities with product recalls.”

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