Torrent Pharma’s Largest Plant Gets U.S. FDA Warning Letter
Torrent Pharmaceuticals Ltd. received a warning letter from the U.S. drug regulator for its Indrad, Gujarat facility, barring fresh approvals from its largest unit that contributes bulk of its sales in the American market.
The warning letter follows the August “official action indicated” by the U.S. Food and Drug Administration, according to the drugmaker’s exchange filing. The status pointed to potential regulatory and administrative action.
The company is fully committed in resolving the issue at the earliest and maintaining the highest standards of compliance and quality manufacturing, Torrent said in the filing, adding that the warning letter won’t disrupt supplies or existing revenues from the facility.
Torrent Pharma is the seventh Indian drugmaker to get a warning letter for its unit this year, joining Glenmark Pharmaceuticals Ltd., Lupin Ltd., Aurobindo Pharma Ltd., Indoco Remedies Ltd., Jubilant Life Sciences Ltd. and Strides Pharma Ltd. The U.S. regulator has increased scrutiny of manufacturing practices of Indian generics companies for their exports to the American market, the biggest revenue contributor for some of them. And that comes when they have been facing intense competition, forcing them to cut prices and settle for lower margins.
The Indrad facility, which contributes more than 80 percent of the U.S. revenues for Torrent Pharma, supplies finished products and active pharma ingredients. The U.S. FDA inspected the unit between April 8 and 16, and followed it with four observations. Its Dahej plant, also important for U.S. supplies, is already under official action indicated status. The American market contributed nearly 18.5 percent to the company’s revenue as of June.
Amey Chalke, pharma analyst at HDFC Securities, expects the Dahej unit to also get a warning letter. Factoring that in, he sees low single digit product approvals for Torrent over FY20-21 and U.S. revenues falling in single digit over the previous fiscal. Margin improvement, he told BloombergQuint, is likely to remain a challenge because of high remediation costs and expected loss of sales.
Deepak Malik, pharma analyst at Edelweiss Securities, said the warning letter won’t impact the revenue or profits for the ongoing fiscal ending March. The delay in resolution, however, can lead to a 3-5 percent cut in FY21 earnings per share.
Torrent has 34 pending abbreviated new drug applications and 11 tentative approvals, according to CLSA. Most of them are from Indrad followed by Dahej.