Mixed fortunes for Caraco

Caraco Pharmaceutical Laboratories has found itself with mixed fortunes in recent weeks. According to an article in the Detroit News (see page 4), the firm has plans to boost production at its New Centre manufacturing plant next year with a US$22 million expansion that will see it take on another 600 members of staff, doubling the size of the firm. This is undoubtedly good news both for Caraco and for the Detroit area, and appears to show that this firm at least is confident that it can buck the trend of the looming recession currently threatening the United States and much of the world. The Detroit News’ article came just over a year after Michigan’s governor announced that Caraco was to invest some US$14.5 million in a 140,000 square foot expansion of its manufacturing facilities in Detroit, and these two events show Caraco to be in good health.

That impression was backed up in late October 2008, when Caraco reported its second quarter and six month results for its fiscal 2009 (see page 5). Caraco’s net sales jumped by nearly 200% for the latest second quarter compared to the previous one, and net sale jumped by just over 200% for the first half of the current fiscal year compared to fiscal 2008. Caraco’s second quarter fiscal 2009 results were nearly 18% higher than its first quarter results, which in turn were over 200% higher than the first quarter fiscal 2008 sales. For both its first and second quarter results, Caraco has said that its sales results have been largely down to sales of distributed products under its distribution and sales agreement with Sun Pharma. Clearly, Caraco is enjoying a period of excellent growth.

However, on 3rd November 2008, the company reported a potential spanner in the works. The FDA issued Caraco with a warning letter issued as a follow-up to the last FDA inspection of the Detroit facility in May 2008. At the time, Caraco responded to all of the observations made within 30 days and took corrective action. However, the new warning letter suggests that there were inadequate and untimely investigations by Caraco’s quality control unit; Caraco noted that the FDA considered some of its observations to be repeat observations. Caraco has naturally stressed that it will work to resolve the issues, but at the same time the firm has noted that the FDA could act by withholding approval of pending new drug applications listing the facility as the manufacturer. Were this to happen, it could upset Caraco’s future plans for the Detroit plant.

Ian Platts - Editor, World Generic Markets