U.S. FDA Lifts Warning Letter On Dr. Reddy’s Duvvada Facility

The U.S. regulator cleared Dr. Reddy’s Laboratories Ltd.’s key Andhra Pradesh facility for exports to the American market, providing relief a day after its shares tumbled nearly 30 percent on repeated concerns about its Telangana plant.

The company received a written communication from the Food and Drug Administration that the warning letter for the Duvvada Unit VII facility now stands lifted, India’s fourth-largest drugmaker by market value said in an exchange filing. Dr. Reddy’s said the regulator categorised the inspection as voluntary action initiated—a status granted to units considered compliant with the good manufacturing practices.

That paves the way for exports from the unit to the U.S.—the company’s largest market. The Duvvada plant, which accounts for less than 10 percent of its sales, will contribute nearly 20 percent of Dr. Reddy’s future drug filings in the U.S., according to Macquarie. That relief comes after the shares of the drugmaker plunged the most in more than 17 years as the U.S. regulator reiterated concerns about manufacturing standards and quality controls at its Bachupally, Telangana facility.

The news about the Duvvada unit lifts a big overhang from the stock, Deepak Malik, analyst at Edelweiss Securities, wrote in a note. The brokerage expects the company’s shares to recover from Friday’s rout.

Half of the new filings from Duvvada are injectables and a few are niche products, according to Edelweiss Securities. Dr. Reddy’s makes generics of Dacogen (used for treatment of chemotherapy side effects) and cancer drug Vidaza at the site.

The U.S. FDA had issued warning letters to Dr Reddy’s three plants—Srikakulam, Duvvada and Miryalaguda—in November 2017. The Duvvada unit had three observations. After reinspection in 2017, the plant got 13 observations and in 2018 received eight. Based on Dr. Reddy’s responses and corrective action, the FDA has now lifted the warning letter.

The Miryalaguda plant was cleared in June 2017. The Srikakulam plant still remains under the warning letter.

Looking Back

• November 2015: U.S. FDA issues warning letter with three observations for the Duvvada plant.
• February 2017: The regulator reinspects Duvvada plant.
• March 2017: U.S. FDA issues Form 483 with 13 observations.
• November 2017: Gets establishment inspection report indicating close of inspection but status remained unchanged at official action indicated.
• October 2018: The regulator reinspects the plant and issues eight observations.
• February 2019: U.S. FDA lifts the warning letter.