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Saturday, Jun 27, 2009
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Business Daily from THE HINDU group of publications Saturday, Jun 27, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Pharmaceuticals Corporate - Overseas Investments Industry & Economy - Standards & Benchmarks
P.T. Jyothi Datta Mumbai, June 26 Sun Pharma may not have a time-frame by which it expects to dispel the regulatory shadow cast on its US subsidiary Caraco Pharmaceutical. The US authorities seized drug products made at the latter’s Michigan facilities on Thursday. But the development is set to dent Sun Pharma’s consolidated revenues, as Caraco contributes about 12 per cent of Sun Pharma’s Rs 4,270-crore revenues. Sun Pharma owns about 76 per cent equity in Caraco. Sun Pharma did not quantify the hit it is likely to take, but Caraco said: “The products in our inventory related to the FDA action are currently being identified. The early estimated value of this inventory is in the range of $15 to $20 million.” Sun Pharma’s shares plummeted on Friday and closed down 12 per cent at Rs 1,140 on the BSE. “We have to wait for Caraco to respond. They have in the past been able to respond within the requisite timeframes,” Sun Pharma spokesperson told Business Line, responding to how it was planning to resolve the issue. Last fiscal, Caraco clocked revenues of about $337 million, of which the lion’s share of $225 million came from the distribution of Sun’s products. But Caraco’s own products accounted for $112 million (about Rs 520 crore), said Mr Ranjit Kapadia, Vice-President Institutional Research with HDFC Securities. The hit Sun Pharma will take depends on the how long it takes to resolve the problem, he observed. In fact, Sun Pharma’s performance in the fourth quarter in US too was below expectations, partly on account of product recalls initiated by Caraco. FDA seizureOn Thursday, US marshals, at the request of the Food and Drug Administration, seized drug products manufactured by Caraco’s Michigan facilities in Detroit, Farmington Hills, and Wixom. And the seizure included ingredients held at these facilities. This means that Caraco will not be able to further distribute drugs until it assured compliance to good manufacturing requirements. Since January, Caraco has initiated voluntary recalls of drug products to protect the public from potentially defective medications, the FDA said. The recalls involved manufacturing defects, including oversized tablets and possible formulation error. In the past, Ranbaxy, Lupin and Cipla, have had run-ins with the FDA with varying degrees of intensity. Caraco had been warned by the FDA late last year too. Meanwhile, Caraco said corrective actions have been made and continual improvements are in process. Products distributed by Caraco that are manufactured outside the Michigan facilities are not impacted, it added. Sun Pharma fourth-quarter net falls 45% to Rs 394 cr Sun Pharma initiates mediation on Taro ‘Caraco warning letter not to impact revenues of Sun Pharma’ More Stories on : Pharmaceuticals | Overseas Investments | Standards & Benchmarks | Regulatory Bodies & Rulings | Sun Pharmaceutical Industries Ltd
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