Almost immediately after our analysis on why “Dr. Reddy’s largest API facility maybe the next to get banned from exporting to the United States”, a stock analyst stated
that there were “hopes of US FDA resolution of Srikakulam plant”. What does the future hold for API manufacturing at Dr. Reddy’s, currently the third largest API seller in the world? As part of the Reuters story, CLSA, a stock brokerage covering Dr. Reddy’s, based their assessment that Dr. Reddy’s troubles are behind them as “one of its customers has received approval for a product, referencing a drug master file from this facility”. While the CLSA report is very positive for Dr. Reddy’s, it’s strange that other than CLSA nobody else has covered this important event. In an attempt to verify CLSA’s statement, we compiled a list of all recent generic approvals (since March 15) which were cross referenced using the Dr. Reddy’s @ PharmaCompass database to determine the active ingredients produced at their Srikakulam facility.
Date
Product
Application
Holder
March 26, 2015
Tolcapone
Par Pharma
March 23, 2015
Argatoban Injection
Fresenius Kabi
USA
March 19, 2015
Zoledronic Acid
Hospira Inc
March 18, 2015
Tenofovir Disoproxil Fumarate
Teva
Pharmaceutical USA
March 17, 2015
Lacosamide (Tentative Approval)
Aurobindo Pharma
March 16, 2015
Celecoxib
Lupin
March 16, 2015
Fluoxetine Hydrochloride
Sciegen
Pharmaceuticals
While Dr. Reddy’s produces 4 out of these 7 recently approved products (Zoledronic Acid, Lacosamide, Celecoxib and Fluoxetine Hydrochloride), only Lacosamide is produced at the Srikakulam facility. The assessment is based
on the Written Confirmations granted by the Indian Drug Regulator which serve
as a good guide to know which products are being manufactured in which
facility. The issuance of the Written Confirmation requires physical
verification of production at the site by the local authorities, which is not
necessarily true in the case of DMFs and CEPs.
The possibility of Aurobindo Pharma’s generic approval of Lacosamide being dependent on Dr. Reddy’s active ingredient is low, as Aurobindo Pharma supports their own USDMF. However, Aurobindo doesn’t have a Written Confirmation for Lacosamide.In
their 2014 annual report, Dr. Reddy’s, defined their revenues from the Pharmaceutical Services and Active Ingredients (PSAI) division, which declined 21.9%, as a “low point” of their overall business. However, Dr. Reddy’s also acknowledges that PSAI is a strength, as it provides vertical integration to their global generics business. While Dr. Reddy’s has announced plans to the Ministry of
Environment, to triple the size of their manufacturing capacity across three
different production facilities, the facility in question, Srikakulam, is not
part of the announced expansion plan. There
still seems to be significant risk to Dr. Reddy’s North American business on account of the USFDA inspection of their Srikakulam API
facility. Read
more about: Dr. Reddy’s expansion plans for API production
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