The FDA Classifies IPCA Laboratories’ Ratlam Facility Favourably

IPCA Laboratories has received a favorable outcome for its Ratlam manufacturing unit from the US Food and Drug Administration (USFDA), providing a potential resolution to compliance issues that have persisted at the facility. The FDA has classified the Ratlam unit as ‘Voluntary Action Indicated’ (VAI) in its Establishment Inspection Report (EIR), the second-best classification a plant can receive.

The VAI classification signifies that objectionable conditions or practices were found during the inspection, but the agency is not prepared to take or recommend any administrative or regulatory action. This is a positive development for IPCA Laboratories, indicating that the response from the plant to observed issues is deemed satisfactory by the regulator.

The Ratlam facility, specializing in manufacturing Active Pharmaceutical Ingredients (APIs), underwent inspection in June of this year and received 11 observations. The facility has been under an import alert since 2014-2015, preventing the export of its products to the US unless otherwise specified.

The VAI classification in the EIR is seen as a promising sign, potentially allowing IPCA Laboratories to resume manufacturing for the US market from the Ratlam facility. Investors and market observers are now keenly awaiting updates on the compliance status of the other two plants operated by IPCA Laboratories, both of which are formulation plants.

The other two facilities, located in Pithampur, Madhya Pradesh, and Piparia, Silvassa, have also faced import alerts in 2015. The resolution of compliance issues at these plants will be crucial for IPCA Laboratories to regain a positive standing with the USFDA.

Nomura, a broking firm, has expressed a positive view on IPCA’s stock, maintaining a ‘buy’ call with a target price of ₹1,133. The VAI classification for the Ratlam site is considered a positive surprise and brings relief, shifting the focus to the fate of the other two facilities. IPCA Laboratories’ successful efforts in compliance management are highlighted by the positive signal from the US FDA after enduring an import alert.

Shares of IPCA Labs rose 6.10% to settle at ₹993, reflecting positive market sentiment. The stock has gained 11.30% in the past month.