FDA notifies Natco Pharma of potential violations at two Indian facilities

Natco Pharma shares declined as much as 15 percent Monday after the company disclosed in a Bombay Stock Exchange filing that the FDA has issued 483 observations regarding two of its manufacturing facilities in India. According to the drugmaker, the US regulator had conducted inspections between February and March at its active pharmaceutical ingredients facility in Manali and its pharmaceutical formulations plant at Kothur.

Specifically, the FDA made eight observations at Natco's Kothur facility, which is the drugmaker's sole drug formulations manufacturing plant. The site is reportedly responsible for 10 percent of the company's total revenue.

Natco indicated that it believes the FDA observations are "minor in nature," adding it has "already sent its response and compliance report for these observations." Further, the company expects "there will be no adverse impact to its current or future pipeline products coming from these facilities."

Commenting on the news, analysts at Religare Securities remarked "we expect the stock to remain under pressure in the near term but retain our estimates until further clarity emerges."

In 2014, the FDA reached an agreement with its counterpart in India to collaborate and inform each other during inspections of drugmaker's facilities. The FDA later moved to increase its regulatory presence in India, including increasing the number of investigators assigned to the country, in an effort to improve the safety and quality of products manufactured.

In November last year, the FDA issued a warning letter to Dr. Reddy's related to observations at three manufacturing sites. In July, Emcure Pharmaceuticals received an import alert from the agency following an inspection of its manufacturing facility in Hinjewadi, India. Additionally, the FDA previously banned imports from Wockhardt's manufacturing plants in Chikalthana and Waluj, while the drug regulator placed an import alert in March 2014 on all drugs and active pharmaceutical ingredients produced at Sun Pharmaceutical's Indian plant in Karkhadi.

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