The US Food and Drug Administration (US FDA) has banned imports from Indian generic drugmaker Sun Pharmaceutical Industries Ltd's plant at Karkhadi in the western state of Gujarat, in the latest quality blow for India's drug sector.
The FDA has imposed a rash of regulatory sanctions on Indian pharmaceuticals companies (generic makers) in the last year, triggering concerns about the quality of the medicines supplied by the $14 billion industry to countries including the United States, the biggest market.
India is second only to Canada as a drug exporter to the United States, where it supplies about 40 percent of generic and over-the-counter drugs.
"The FDA is becoming more stringent. It's a learning curve for everyone. You have to invest more," said B&K Securities analyst Rohit Bhat. "Companies will have to pull up their quality parameters."
It was not immediately clear why the FDA imposed the ban on Sun Pharmaceuticals Industries's Karkhadi plant.
The FDA issued an "import alert" against the factory on its website said on Wednesday. The agency defines such a sanction as something that results in the detention without physical examination of drugs from firms that have not met so-called good manufacturing practices.
The ban on the plant underscores growing concerns about the quality of medicines made in India, often referred to as the low-cost "pharmacy to the world", as demand for generics grows in countries from the United States to Japan.
A Sun Pharma spokeswoman said the financial impact of the FDA ban on U.S. shipments from the plant, which makes antibiotic cephalosporin, would be "negligible". The plant accounts for less than 1 percent of its overall sales, she said.
Sun Pharma also said it had initiated "several corrective steps" to address the FDA's concerns, and kept its guidance for consolidated sales for the fiscal year ending this month.
The Karkhadi plant is one of Sun Pharma's 25 manufacturing plants, of which 11 are in India. Three of those plants, including the Karkhadi plant, are in Gujarat.
Shares in Sun fell as much as 6.4 percent on Thursday.
Industry officials in India say weak local regulatory oversight and a lax approach to quality control by some drugmakers in a rush to tap growing global demand for generics can result in sub-standard manufacturing processes.
The urgency to be first with a generic version of a drug coming off patent is one of the reasons for quality problems, they say. The company that first launches such a