Hengrui's warning letter has come again, and the leader has stumbled in production quality control this time.

This warning letter is the follow-up measure of the site inspection results of No. 38 Huanghe Road, Lianyungang Economic and Technological Development Zone by FDA from January 8 to January 16, 2024. The progress is not going well, but Hengrui still has a chance to rectify the situation.

What does receiving an FDA on-site inspection warning letter mean?

Previously, in June, Hengrui had received the FORM 483 form and entered the second stage of on-site inspection, the OAI (Official Action Indicated) stage. This warning letter means that the previous stage of rectification was not fully recognized by the FDA, and it has entered the formal action phase of more serious supervision.

FDA on-site inspection process diagram

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JZ Research has previously warned in the article "Hengrui's FORM 483 is not that simple | JZ Research" that receiving OAI by Hengrui means that the inspection has entered a serious stage and the company should pay enough attention.

Recently receiving a warning letter is an extremely serious event for on-site inspections in pharmaceutical manufacturing.

From the perspective of the entire FDA inspection process, Hengrui's on-site inspection has entered the last stage. If the rectification opinions submitted within 15 days are approved, the warning letter will be closed. If the FDA does not approve the opinions, it means that there will be more serious consequences such as recall and export ban.

What violations did the FDA find?

The core content of this warning letter is focused on two points, although they do not directly affect the quality and safety of the products, the risk of inadequate prevention of contamination in the aseptic area is still not be underestimated.

1) The quality control department did not perform its duties properly in the supervision and control of documents, and failed to ensure that the produced preparation complied with CGMP requirements;

2) The facility design is insufficient, and the area used to produce aseptic products does not have sufficient measures to prevent contamination or confusion.

In response to the issues raised in this inspection, Hengrui Pharmaceuticals told JZ Research of Wall Street that the company always puts patient safety first and attaches great importance to the opinions raised by regulatory agencies during the inspection. Regarding the improvement suggestions raised by the FDA in this warning letter, the company will actively organize internal and external experts and third-party consulting agencies to implement relevant suggestions, and maintain close communication with the FDA, striving to close the warning letter as soon as possible. At the same time, the company has conducted a comprehensive investigation and evaluation, and the problems pointed out in this FDA warning letter have not affected the quality and safety of the drugs.

It is understood that the production site involved in this warning letter was put into use in 1999 at No. 38 Huanghe Road, Lianyungang Economic and Technological Development Zone, and was first inspected by the FDA in 2010. Subsequently, it was inspected by FDA's GMP on-site inspection in 2012, 2014, 2016 and 2018, all of which passed smoothly, with two of them achieving zero defects.

The production site of this inspection has 12 generic drug varieties that have been granted FDA marketing approval, none of which are Hengrui's main products. The revenue from products exported to the US market from this site in 2023 was 12.4 million US dollars, accounting for about 0.39% of the company's 2023 revenue; the revenue from products exported to the US market from this site in the first quarter of 2024 was 3.9388 million US dollars (unaudited), accounting for about 0.47% of the company's current revenue.

Regarding the impact on the current performance, Hengrui told JZ Research that the warning letter is expected to have no significant impact on the company's 2024 performance.

Hengrui Pharmaceuticals has production bases in 9 cities across the country, including 4 production bases in Lianyungang: an internationalized preparation production base, a new medical industry park, a biomedicine production base, and an active pharmaceutical ingredient production base. The site involved in this warning letter is the earliest completed site under the internationalized preparation production base.

Hengrui Pharmaceuticals also further stated that this warning letter has no impact on the company's other production sites, and the products exported to the US market by the company are currently not affected.

Implications for domestic enterprises

As the world's most stringent regulator, FDA conducts more than 17,000 on-site inspections in the United States and overseas every year. From official FDA data, the number of international inspections has been increasing year by year, indicating FDA's attention to the global supply chain and its emphasis on international compliance.

In addition, the number of OAI classification inspections has increased in recent years, indicating that the discovery of serious violations is increasing, which may lead to more official actions.

With the smooth international travel, FDA's on-site inspections will resume normalcy and there is a trend towards stricter regulations in the new international context. For China Meheco Group export companies, not only do they need to pay more attention to their own product quality, but they also need to pay attention to changes in the regulatory environment of their target market.

In addition, for production sites that have been used for many years, Chinese pharmaceutical companies also need to further evaluate in accordance with regulatory requirements to improve production quality control, comply with regulatory requirements and patient health. After all, for a pharmaceutical company, producing compliant drugs is equally important as treating patients.