Dr. Reddy’s struggles to meet FDA concerns

Managers at India’s Dr. Reddy’s Laboratories do not expect to be ready for another FDA inspection of the company’s manufacturing facilities until December.

Many Indian drug firms, such as Ipca Laboratories, Cadila Healthcare, and Sun Pharma, have had recent quality issues and run-ins with FDA. Reddy’s problem with FDA stems from a warning the agency issued to Reddy’s in November 2015 that three of its facilities did not meet U.S. manufacturing standards. And during a reinspection of one of those facilities in March, FDA once again discovered several shortcomings.

While talking to financial analysts late last month after the announcement of the firm’s first-quarter earnings, Dr. Reddy’s chair and CEO G. V. Prasad noted that the company had to “systematically implement our new quality-management system and automate some of the critical manufacturing and quality-related processes.” Chief Operating Officer Abhijit Mukherjee added, “Optimistically, we expect to have FDA coming by year-end, December.”

In the first quarter of its current fiscal year, Dr. Reddy’s sales in North America declined 4% compared with a year earlier. The company blames primarily “price erosion” for the drop. But in his comments to analysts, Prasad also noted that regulatory issues constrained the company’s ability to get approval for new product launches.

During an inspection in 2014, which led to the 2015 warning, FDA inspectors discovered an undeclared quality-control lab at the company’s plant at an industrial park in the state of Andhra Pradesh, India. FDA also found that Dr. Reddy’s routinely retested failed batches until it got favorable test results.

“What would otherwise be minor deficiencies in a more trusted company now turn into major expenditures and radical changes for Dr. Reddy’s,” says Peter Saxon, president of Saxon International Associates, a New Jersey-based consulting firm that advises foreign drug producers on U.S. drug manufacturing regulations.

The nature of the company’s previous violations, he says, revealed an intention to deceive FDA, as well as regulators in other countries, he believes. In Saxon’s experience, it takes time for a company to completely erase a corporate mind-set that condones dishonesty.