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Caraco work plan gains FDA approval; begins rehiring

By Wai Lang Chu , 07-Jun-2010

Caraco’s work plan setting out remedial actions needed to restart production at its Detroit-based plant has been approved by the FDA.

The approval signifies a long journey towards good manufacturing practice (GMP) compliance and site productivity, which has seen the Michigan company suffer significant loss of revenue due to an absent manufacturing presence.

Last year the US Food and Drug Administration (FDA) ordered the seizure of Caraco materials. The seizure included ingredients and in-process materials held at the facilities and had a total estimated value of $24m (€20m). The seizure was immediately followed by an 18 per cent drop in stock value of Sun Pharmaceuticals, Caraco’s parent company.

As a result of the FDA action last June, Caraco voluntarily ceased manufacturing operations and instituted, in two phases, indefinite layoffs of approximately 430 of its 650 employees.

Rehiring

According to Crain's Detroit Business, the company has subsequently recalled 50-100 employees last month in conjunction with its efforts to restart its manufacturing activities.

The company has also transferred select products to alternate manufacturing sites that would allow the company to receive revenues while Caraco worked to resume its manufacturing operations.

In addition, the resumption of sales of certain generics is sure to help the company's relationships with distributors and customers.

Speaking at an earnings call earlier this year, Dilip Shanghvi, chairman and managing director of Sun Pharmaceuticals, reiterated Caraco’s efforts to transfer the products which contributed significant revenue.

“However, Caraco have not guided as to the timeline by which these products will come back to market either from the third party site or their own manufacturing site,” he added.

Alternative sites

Shanghvi did not mention where the products were to be transferred to but Sun Pharmaceuticals could look to its other US-based site in New Jersey as one possibility.

In addition, Sun Pharma can also look to its subsidiary Alkaloida Chemical Co, a Hungarian-based Sun subsidiary, purchased in 2005 for drug manufacturing and marketing within the North American region.

Reflecting the loss of manufacturing activity after the FDA action, Caraco recorded a net loss of $3m in the fourth quarter. For the full year, Caraco reported sales of $234m but a net loss of $ 9m.

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