Impact Analyses - Hetero Unit IX API facility Observations Will Have Impact on Formulation Business Too

Hetero Labs’ Nakkapalli API manufacturing facility in Andhra Pradesh was inspected by the USFDA between September 19 and September 26, results in a Form 483 that lists six major compliance lapses. The inspection flagged serious violations.

This inspection uncovered widening gaps in Hetero’s quality systems. Finished APIs meant for the US market were dispatched to an external warehouse without proper documentation. Inspectors also identified an unregistered testing laboratory and an unregistered warehouse operating outside the approved premises.

Given the seriousness of USFDA observations, a severe and widespread action is highly likely which may result in an Import Alert. 

• The reviewed list includes 24 APIs manufactured at Unit IX, of which 16 are antiretroviral (ARV) drugs—key for HIV/AIDS treatment regimens. The site plays a critical role in the company’s global supply chain.
• Remaining APIs serve diverse therapeutic segments, including cardiovascular, neurological, and psychiatric indications.
• We analysed the impact of Unit IX (APIs) on Hetero’s US formulation business, assuming that Hetero is fully dependent upon the APIs from Unit IX for the manufacture of its related generic formulations. In light of that, Unit IX indirectly impacts 20 products (12 ARV and 8 non ARVs).
• In terms of revenues, the formulation products (dependant on Unit IX APIs) represent a sizeable portion of Hetero's own US formulation sales.
• Of all the formulation products, 12 products hold more than 25% market share. Of the 12 products, 2 products have sales of more than $5m – which may likely result in shortages in the US if supply gets disrupted.
• In addition to the US, Hetero also supplies ARV products to the African countries. A significant part of that revenue is generated through purchases by the African countries funded by the US government and requiring USFDA approval for each product. In other words, the impact of Unit IX could also be seen on generic ARV business to African markets – though we are unaware about its market share.