Market Place
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 |
Par Pharma |
|
|
March 23, 2015 |
Fresenius Kabi USA |
|
|
March 19, 2015 |
Hospira Inc |
|
|
March 18, 2015 |
Teva Pharmaceutical USA |
|
|
March 17, 2015 |
Lacosamide (Tentative Approval) |
Aurobindo Pharma |
|
March 16, 2015 |
Lupin |
|
|
March 16, 2015 |
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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