Shares in Indian drugmaker Sun Pharmaceuticals sank more than six percent Thursday after US regulators banned the import of some of its products, dealing a fresh blow to the nation's troubled generics market.
The US Food and Drug Administration (FDA) announced late Wednesday an "import alert" on drugs made by Sun at its plant in western India over failure to meet "good manufacturing practices".
The FDA action against India's largest drugmaker by market capitalisation comes as US regulators increase scrutiny of manufacturing standards in India's $14-billion-a-year pharmaceutical sector, aimed at eliminating quality lapses.
Sun shares fell as much as 6.4 percent before retracing to trade down nearly four percent at 588.70 rupees by early afternoon.
The Sun plant in Karkhadi, Gujarat state, is one of around 10 owned by the company in India and produces ingredients for medicines as well as drugs themselves.
The import ban will remain in place until the FDA is satisfied "the appearance of a violation (of good manufacturing practices) has been removed" either through re-inspection or submission of documentation, the regulator said.
The action against Sun is the latest in a string of FDA moves against Indian drug manufacturers.
A Sun spokesman was not immediately available to comment.
India, known as "pharmacy to the world" with its vast generics market, supplies medicines to more than 200 countries -- many in the emerging world -- and is the second largest supplier of drugs to the United States after Canada.
Over the past few years, the FDA has banned imports from theIndia-based factories of Ranbaxy Laboratories, the nation's largest pharmaceutical company by sales, citing rampant quality problems.
The FDA has also targeted major drugmaker Wockhardt, blocking it from producing drugs for the US markets from some of its plants over quality problems.
Earlier this week, the FDA said Sun voluntarily recalled 2,528 bottles of a generic diabetes drug from the US market after a customer complained one bottle contained an epilepsy medicine.
Last weekend, Ranbaxy announced it was withdrawing two lots of Atorvastatin calcium tablets, a generic version of Pfizer's cholesterol-busting drug Lipitor, after a complaint about wrong dosage.
Analysts said they worried about a repetition at Sun of what happened to Ranbaxy.
"It started with an import alert on one plant but gradually the rest of it (Ranbaxy) came under scrutiny," Nilesh Shah of Mumbai's Envision Capital told CNBC-TV 18.