Glenmark Recalls Contraceptive Drugs In The USA

Glenmark Pharmaceuticals, through its US subsidiary Glenmark Generics, has issued a nationwide voluntary consumer level recall of seven lots its contraceptive drug Norgestimate and Ethinyl Estradiol in various strengths. This recall has been implemented due to the packaging error which made the lot numbers and expiry date visible only on the outer pack. Women, who consumed tablets from these lots, may face inadequate contraception but will have no immediate health risk. These batches were distributed during September 21, 2011 and December 30, 2011, according to the filing made by the company to the stock exchange. 

Oral contraception is a leading method of contraception in the USA. It is also estimated that there are 62 million women in their child-bearing years (15-44 years). Of this, about 28 per cent of women practice contraception. Glenmark had received USFDA approval for this product on June 20, 2011. The branded version of this product named ‘Ortho Tri-Cyclen’ is being sold by Jenssen Pharmaceuticals and the market for the same is about USD 226 million. 

When we spoke with the Investor Relations Department of Glenmark Pharma, it came to our knowledge that the company launched this product in October 2011. According to them there is no defect in the product, rather Glenmark Pharma itself went ahead to inform the FDA about the packaging error which came to light after one of its consumers found the same. The rest of the lots of this product continue doing good. The management sees no financial penalty from the FDA.

For the nine months ended December 2011 the company has reported 37 per cent rise in its topline. The generics business grew by 31 per cent while the specialty business grew by 42 per cent.  Its generics business in the US has reported a healthy rise of 42 per cent, indicating strong business growth. Its performance on the net level has been disappointing due to one-off royalty payment. On the operational front too, the margins declined by 236 basis points. 

We believe that the US market, though the biggest, is one of the most regulated markets and the impact of this drug recall cannot be accessed in a very short period of time. In earlier cases of drug recalls the USFDA had imposed some financial penalty on the companies. On the back of this, we advise our readers to trade cautiously.