Marksans Pharma has been in the news for 2 different events. We covered the latest event yesterday in our daily Deal Flow report “Vanguard International buys into Marksans Pharma“. Today we cover the older news of related to the UK MHRA GMP inspection of the company’s Goa plant. Medicines and Healthcare Products Regulatory Agency (MHRA) is an executive agency of the Department of Health in the United Kingdom which is responsible for ensuring that medicines and medical devices work and are acceptably safe.
Marksans Pharma share price has fallen from a high of Rs. 113.9/- on 28-Dec-15 to a low of Rs. 33.5/- on 1-Mar-16 only to close up at Rs. 49.8/- on Friday the 18-Mar-16.
The biggest fall in the prices have coincided with the 2 days when the company came out with updates about the inspection. The first being on 13-Jan-16 when the stock price closed down 26.82%. Here is what the company said then:
UK MHRA has conducted a GMP inspection of the Company’s plant at Goa in the month of November 2015. Pursuan to the inspection, UK MHRA has issued certain observations which the Company has responded to.
The Company is awaiting further response from UK MHRA in this matter as on date. Company’s Goa plant is functioning normally and the shipments to UK is continuing in the normal course of business.
The other biggest fall happened 2 days later on the 15-Jan-16 (down by another 27.24%) when the company announced the below:
- UK MHRA GMP inspection of the Company’s Goa plant commenced on 23rd November, 2015 and ended on 25th November. 2015
- UK MHRA issued observation on 2nd December, 2015 and company acknowledged on the same date.
- Company responded to UK MHRA observation on 16th December,2015
The Company Can’t Do More Drugs But Can Continue Existing Ones: A Restricted GMP Certificate
Here is what the company had to say:Pursuant to the UK MHRA GMP inspection of the Marksans’s Goa plant conducted from 23’rd November,2015 to 25th November,2015 and subsequent to the Company’s response to the UK MHRA observations, the Company has received communication from UK MHRA informing that they are issuing a “Restricted GMP Certificate” allowing the Company to continue manufacture and marketing of critical products for the UK markets.
The restricted GMP status would continue until MHRA’s next inspection. Next re-inspection can be as early as when the Qualified Person EU(QP) certifies site to be inspection ready. Once reinspected , the same can be reinstated to GMP compliant status.
As per MHRA’s assessment, listed products manufactured by Marksans Pharma for the UK market are evaluated to be critical for public health and are allowed continuation of manufacture. Marksans Pharma is committed to complete holistic remediation and be inspection ready to be GMP compliant at the earliest.
We obtained a copy of the “Statement of Non-Compliance with GMP“. A summary of the report has been captured below. Here is the link to the original report
A prior inspection in March 2015 identified several serious Major deficiencies in the operation of the Pharmaceutical Quality System. These included systems to ensure Data integrity, Deviations and CAPA management, Change Controls, PQRs and Self-Inspection.
A November 2015 re-inspection was carried out to assess the remediation plan from the company. There was a lack of evidence to demonstrate the effectiveness of resultant CAPAs taken and a lack of interim assurances to ensure that the on-going operations remain in compliance with GMP, including failures to carry out effective investigations.
The November inspection identified a critical deficiency relating to systems to ensure Data Integrity in the following respects:
- Evidence of destruction of multiple parts of records of prime data
- Overall Data Integrity management and oversight
- Investigations into Missing and deleted data within the laboratory incomplete
- Procedures controlling Data Integrity within the laboratory not in place
Action taken/proposed by the NCA :
- Withdrawal, of current valid GMP certificate No. UK GMP 19826 Insp GMP 19826/39398-0003
Withdrawal of previous GMP Certificate No: UK GMP 19826 Insp GMP 19826/39398-0003
Requested Variation of the marketing authorisation(s)
- No further MA should be approved naming the site as manufacturer. Current pending MA applications should be held or refusal to grant stated whilst this statement of non-compliance remains in force.
Recall of batches already released
- There is no evidence of defective product currently on the market. Recall of products is not considered necessary.
Prohibition of supply
- No further batches of medicinal products considered non-critical to public health to be supplied to the market whilst this statement on non-compliance remains in force
Our View: Marksans Should Fix This Fast
With no product recalls, the situation at Marksans is not super-critical, but the shoddy manufacturing practices mean that they will not be able to get approval for new drugs into the UK from this plant. And they can’t even do non-critical drugs (even if currently approved). Only a restricted licence applies, meaning they get to provide critical drugs until the next inspection.
Is Goa important? For Marksans, it is – it’s the only plant it has in India (the other one’s in the UK) and they have been trying to move more production to Goa, including from their mega Relonchem acquisition in the UK. Relonchem is about 42% of UK revenues, which are about 42% of the company’s global revenues! The UK Generics business is about 50% of their overall business mix.
As recently as March 18, Vanguard’s International Explorer Fund bought about 0.5% of the company, which means institutions aren’t unduly worried. But if there should be an outright ban, it will result in the company’s shares slipping even further. Marksans saw profits drop in the December quarter, and given how heavy the UK generics business is for the company, there is a strong need for a speedy and positive resolution to a partial ban from the MHRA.
Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion.