In its warning letter for the Mandideep plant, the FDA had said that similar observations across the three plants signal a company-wide problem. (Bloomberg)
In its warning letter for the Mandideep plant, the FDA had said that similar observations across the three plants signal a company-wide problem. (Bloomberg)

Facing regulator’s heat, Lupin shows urgency with quality control hire

  • Whether Johnny Mikell will be given enough authority to steer the ship will be an important factor, say analysts
  • Resolving the issues soon will be crucial for the company, considering that further delays would make it more prominent on US FDA’s heat map

NEW DELHI : Pressure seems to be mounting on Lupin Ltd, with three of its plants receiving warning letters from the US Food and Drug Administration (FDA), while a fourth is under intense scrutiny.

The company’s attempts to resolve the issue, or at least prevent things from getting worse, were reflected in last week’s appointment of Johnny Mikell as its global head for quality.

Mikell, an over 35-year veteran of the pharmaceutical industry, was the global head of quality and compliance at Canadian pharmaceutical firm Apotex Inc. He also had stints in Amneal Pharmaceutical Inc. and Novartis, among others.

“The appointment of a new global head for quality control seems like a step taken out of urgency to ensure quality adherence, considering that three of its plants are under US FDA warning letter," said Siddhant Khandekar, assistant vice-president (research), ICICI Securities.

The company’s major formulation-manufacturing plants at Goa and Indore in Madhya Pradesh, have been under FDA warning letter since November 2017. Last month, its bulk drug-manufacturing plant at Mandideep received a warning letter from the US regulator.

Considering that a fourth plant at Somerset in the US, operated by subsidiary Gavis Pharmaceuticals Llc, is also under “official action indicated" (OAI) status, the situation can aggravate further, Khandekar added.

In its warning letter for the Mandideep plant, the FDA had said that similar observations across the three plants signal a company-wide problem.

“These repeated failures at multiple sites demonstrate that management oversight and control over the manufacture of drugs are inadequate. You should immediately and comprehensively assess your company’s global manufacturing operations to ensure that systems, processes and the products you manufacture conform to FDA requirements," the regulator had said in its letter.

Resolving the issues soon will be crucial for the company, considering that further delays would make it more prominent on US FDA’s heat map. It is also likely to bring all the company’s US-serving plants under intense scrutiny.

Analysts said that a new global quality head, especially one having experience in dealing with the US FDA, is a step in the right direction.

Lupin needed a change in the top management as quality was systematically going wrong for them. I think the situation should improve with this and this is an important change," said Vishal Manchanda, an analyst at Nirmal Bang Institutional Equities.

However, most analysts covering the pharmaceutical sector said while a new person at the helm could help, it is too early to say anything. Whether Mikell will be given enough authority to steer the ship will be an important factor, an analyst said, requesting anonymity.

US sales contribute about one-third to Lupin’s global revenue.

Revenue from the region declined 12% to $777 million in 2018-19, as the company struggled with regulatory issues, as well as pricing pressure for generic medicines, primarily for Methergine, which is used to treat postpartum hemorrhage, according to the company’s annual report.

In such a case, resolving regulatory issues around the four plants will be imperative for the company.

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