U.S. FDA Flags Quality Lapses At Lupin’s Goa Facility
The U.S. drug regulator has flagged non-compliance with manufacturing and testing standards at Lupin Ltd.’s Goa facility that caters to the American market for the drugmaker.
The formulations or the final drugmaking unit of the Mumbai-based company received seven observations, according to its exchange filing last week. It, however, didn’t disclose details.
A copy of the observations obtained by BloombergQuint from the U.S. Food and Drug Administration revealed that the regulator highlighted quality control and procedural lapses at the facility.
The U.S. FDA completed the inspection at the Goa facility on Sept. 18. The unit, along with four other facilities of Lupin, is already under a warning letter.
The U.S. regulator’s key observations include:
Some unexplained discrepancy in the out-of-trend test data conducted by the company which could be associated with some specific discrepancy or failure. The site failed to investigate this as per their standard operating procedure for handling out-of-specification test results and proceeded with non-conclusive test results and reasons that were not backed by scientific rationale.
The quality control unit did not test in-process materials for strength for approval or rejection during production. The company changed the batch sizes of specific products and conducted some validation tests. But it didn’t conduct the tests on manufacturing batches.
Sample testing at the facility did not assure conformation with specifications of the drug product and the in-process material. The supervisor and machine operator could not provide documented evidence for discarding some tablets. The company conducted additional tests to fine-tune machines, but the results were not documented.
Lupin procures raw materials from various suppliers and is responsible for independently establishing the reliability of the component supplier’s report and validating the test results. The company, however, is not conducting such tests adequately and reporting results directly from the supplier’s report. It does not have a quality procedure to meet this requirement at appropriate intervals.
The procedures for annual quality standards record evaluation for the U.S. market were found to be deficient to the extent that they did not address the review of returned drugs.
The written stability protocol which helps monitor the quality, purity, potency, and identity that could be expected to change upon storage was not being followed specifically for its sealed products.
The access to storage areas for labels and labelling products was not restricted to authorised personnel only. The products were stored on the shelves of the warehouse freely accessible to all.
In response to BloombergQuint's emailed queries on Monday, a Lupin spokesperson said, “We are confident of addressing the observations satisfactorily and are committed to be compliant with Good Manufacturing Practice standards across all our facilities."
Shares of Lupin opened lower but were trading 1.1% higher as of 3:18 p.m., compared with an almost unchanged benchmark Sensex.
The outcome of the recent inspection at the Goa site to be “an incremental positive”, Nomura said in a note.
It initiated coverage on Lupin with a 'buy' and a target price of Rs 1,297 apiece, implying an upside of 40% from the previous close.
None of the seven observations are classified as a repeat observation.
The first observation on investigation of out-of-trend and out-of-specification readings is a bit of a concern.
But unlike in the past, the research firm senses that the intensity of out-of-specification test results invalidation is lower now.
Other observations were procedural in nature and did not indicate structural issues or a lack of control on the part of the company.
Observations are "incrementally negative given that the facility has been under a warning letter since November 2017.
It initiated a 'sell' on the stock; price target not released yet.
The observations defy complete resolution, which is a precursor to U.S. filing for Lupin amid increasing pricing pressure.
Goa is one of Lupin's largest facilities catering to the U.S. market.
The failure to get its largest facility cleared raises question on the eventual regulatory resolution of Lupin’s facilities and its ability to monetise the R&D expenditure incurred over the last four years.
The company also has four other facilities under warning letters.
(Updates an earlier version to add Lupin's spokesperson's response)