Dr. Reddy’s Laboratories announced that the German regulator had not renewed GMP (good manufacturing practice) compliance certificate of its formulations manufacturing unit-2 in Bachupally, Hyderabad, following an inspection.

Pending revocation of the non-compliance notification, the plant will not be able to make any further despatch to the European Union, DRL said in this stock exchange filing.

The drugmaker’s German subsidiary betapharm Arzneimittel GmbH had received a communication from the Regulatory Authority of Germany (Regierung von Oberbayern) on Wednesday night. The GMP compliance certificate in respect of the formulations manufacturing unit-2 plant in Bachupally is not renewed consequent to the recent inspection of the plant, the subsidiary had informed.

For the non-compliance notification to be revoked, another inspection would be required, which has to be initiated by an invitation from betapharm, DRL said.

The filing did not share details of violations leading to the certificate not getting renewed, however from the EUDRA GMP database, the following details can be seen:

Nature of non-compliance: Critical deficiencies: 1. Essential elements of Pharmaceutical Quality System – PQS are not effective. (details see major deficiencies) a) OOS-results are systematically invalidated in hundreds of cases without traceable and scientific based root-cause-analysis due to “staff-errors”. b) Deviation- and OOS-management, but also protocol-, review- and reporting-systems are designed and executed in a way to systematically not document and report “discrepancies, non-conformancies, incidents, unusual events, …”. c) Cleaning of rooms and also direct-product-contact equipment were verifiable not or not successful performed, but documented as dully done in batch manufacturing/packing record – BMR/BPR. Conclusion: By this, completeness and integrity of BMR, BPR and BTR cannot be assured. In consequence, BMR, BPR and BTR and related reviews (e.g. batch record review) do not enable an objective and solely quality oriented batch-release decision for release-officer and EU-QP at importers site. From this, it is additionally to be concluded, that root-cause analysis for production-based OOS-result or investigation of market-complaints (“quality defects/defective product report”) by review of BMR/BPR cannot be performed objective and successful, because the records do not document “negative-events” and therefore continuous occur “clean”. Major deficiencies: (only examples are given for sub-items related to 5 major deficiencies) 1. Deviation-management and QP-batch-certification (7 sub-items) 1.1 Threshold for “incident-logging” unacceptable high. 1.2 Impact of “equipment-break-down” on batch-quality not evaluated in BMR/BPR 1.3 “Incidents” not contemporary evaluated 1.4 Release of batch without MA-compliance because of not proper “incident” handling (batches will be recalled from MA-holder) 2. Design, condition and maintenance of rooms and equipment. (8 sub-items) Sub-items linked to 2.1 Balance-calibration and integrity of conc. documentation 2.2 Surfaces of manufacturing rooms 2.3 HVAC-filter cleaning and maintenance 2.4 Unsuitable doors 2.5 Unsuitable dispensing-equipment 3. Cleaning of rooms and equipment. (9 sub-items) 3.1 Dirty rooms and equipment 3.2 Integrity of cleaning-documentation 3.3 Cleaning-status labeling 3.4 Status-label “clean” of uncleaned equipment 3.5 Dedicated-equipment labeling 4. Validation of manufacturing process. (4 sub-items) 4.1 Unintended approval of MBR from failed process-validation 4.2 Not proper follow-up of failed process-validation 4.3 Batches from this process supplied to client (batches will be recalled from MA-holder) 5. Investigation and handling of OOS-results. (9 sub-items) Non EU-GMP compliant handling of OOS-results (systematic invalidation) 5.1 Stability program testing 5.2 Raw-material, bulk- and finished product testing 5.3 Purified water testing

DRL’s revenue in FY’17 from export of generics to markets in Europe, including Germany and U.K., was ₹760 crore. The Europe market for DRL primarily includes Germany, U.K. and out licensing sales business. The company operates in Germany through betapharm, which it had acquired in 2006.

DRL is under scrunity from USFDA, with the regulator issuing a warning letter in November regarding deviations with GMP at its API manufacturing facilities in Srikakulam (AP) and Miryalaguda (Telangana) as well as violations at its oncology formulation manufacturing facility in Duvvada, Vishkhapatnam. In June, USFDA had issued an Establishment Inspection Report for the Miryalaguda facility, which the company said indicated closure of the audit.

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