Granules India Ltd. has confirmed that its Gagillapur facility in Andhra Pradesh has been classified as an Official Action Indicated (OAI) by the US Food & Drug Administration (USFDA). This development, announced on December 3, highlights potential challenges for new product approvals from the site. However, the company reassures stakeholders that this classification does not impact the manufacturing, distribution, or sale of existing products from the facility.

This classification stems from a Form 483 issued in September 2024, containing six observations. In response, Granules India has adopted a proactive and voluntary remediation plan, addressing these concerns comprehensively. As part of its commitment to patient safety and compliance, the company temporarily halted manufacturing and dispatches in September to conduct a thorough risk assessment, ensuring no risk of product contamination. Operations have since resumed, supported by enhanced corrective and preventive actions (CAPAs) and independent third-party oversight.

Progress on Remediation

Granules India has achieved 80% completion of CAPAs, with the remainder on track for closure by March 2025. Regular updates are being provided to the USFDA, and the company is seeking a meeting with the regulator to showcase progress and request a potential reinspection.

Growth Strategy Beyond Gagillapur

Despite the OAI classification, Granules India emphasizes its diversified growth trajectory. Key initiatives include:

• New launches from its recently established US facility.
• Growth in large-volume products across the US and Europe.
• Expansion of its greenfield formulations facility in Genome Valley.
• Advancements in the European value chain and the oncology pipeline at Unit V.

These measures aim to ensure sustained performance, underscoring the company’s commitment to compliance and innovation.

Market Impact

Following the announcement, Granules India’s stock dropped 10% on Tuesday. The stock is currently under an F&O ban, restricting new positions. Market experts, including Deven Choksey of DRChoksey Finserv, noted that mid-cap companies face heightened scrutiny, with any negative news impacting investor confidence significantly.

Commitment to Excellence

Granules India reaffirmed its dedication to regulatory compliance and patient safety. The company’s ongoing efforts, supported by robust CAPAs and strategic growth drivers, highlight its resilience and adaptability in navigating regulatory challenges.

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