India accuses Balaji Amines of making pharma-grade chemical without a drug-making licence

New Delhi: Indian authorities have accused Balaji Amines of producing pharmaceutical-grade propylene glycol without a drug manufacturing licence, after some batches were found to be substandard, government documents show

Propylene glycol or PG has been at the centre of a major scandal with its suspected contamination in Indian-made cough syrups linked to deaths of more than 150 children overseas and at home, including some in the past month.

Drug authorities, however, found no evidence of any contamination in the PG - an odourless solvent - produced by Balaji, according to a test report seen by Reuters.

The company, which makes a wide range of other chemicals for the agricultural, food and pharmaceutical industries, told Reuters it had not sold PG to "Pharmaceutical companies intended for Pharma applications" since it began manufacturing the product in 2022.

"We have the manufacturing permission to manufacture propylene glycol - technical grade and food grade only - and have been manufacturing for these specific user applications only," it said in an email. Food and other industries typically require a less pure grade of PG.

At behest of non-pharma clients

The company was said to have "manufactured & sold/distributed propylene glycol USP/IP (U.S. and Indian pharma standards)" without a licence in a March letter by Santosh Indraksha, a senior officer with the Central Drugs Standard Control Organization (CDSCO), to another government department.

Indraksha and the CDSCO did not respond to Reuters queries.

Balaji said it had tested its PG using U.S. and Indian pharma standards at the behest of its non-pharma clients, and this was the reason why those standards were mentioned in its PG labels. It added that it applied for a licence to make pharma-grade PG in January and is waiting for approval.

Indian authorities started investigating Balaji after finding in April 2024 that a batch of pharma-grade PG it made a year earlier was below standard for having more water in it than permitted. They later learned the company did not hold a drug manufacturing licence for the chemical, the documents show.

Indian federal and state drug inspectors visited Balaji's facility in March this year and "recommended for taking deemed fit action," Indraksha wrote in the letter, asking for more checks in May this year. Reuters was not able to ascertain if any action has been taken against the company.

Balaji, which has a market value of about $500 million, confirmed that inspectors visited in March and sealed some samples that the inspectors asked the company to store "until further intimation".

The company added, however, that there was not any "ongoing investigation in this regard".

G.D. Hukare, a senior drug officer with Maharashtra state's Food and Drug Administration who warned the company last year over its lack of a licence, told Reuters on Monday that the state had written to CDSCO, which has taken the lead in the investigation, to "take appropriate action".

Descriptions in presentations changed

Balaji shares have tumbled 24 per cent in the year to date. The broader Mumbai market is up more than 5 per cent.

The company says on its website that it counts top Indian drugmakers as its clients for its various products and exports to many nations.

The batch tested by drug inspectors last year had more than five times the permissible water content, but there was no contamination with ethylene glycol or diethylene glycol - the toxins that have been linked to most of the deaths in recent years, the documents showed.

But in at least nine presentations filed with the stock exchange between May 2022 and August 2024, Balaji said it had an installed capacity to annually produce 15,000 tons of PG, listing only "pharma" as its application of use.

In its latest filing on August 5 this year, however, it listed only "food grade" as its application area.

Indian drug laws carry a jail term of up to five years and a fine for selling without holding valid manufacturing licences.