Shares of this pharmaceutical company slumped around 7 percent on Monday’s trading session after the US Food and Drug Administration issued severe observations about the company’s unit in Telangana.
With a market capitalization of Rs. 91,383 crores, the shares of Dr Reddy’s Laboratories Ltd started Monday’s trading session on a lower note at Rs. 5,500 compared to the previous close of Rs. 5,736. The share hit a low of Rs. 5,370, making a loss of around 7 percent and currently trading at Rs. 5,450 apiece.
Such a bearish movement in the share price was observed after the company received several observations to one of the company’s units located in Telangana. According to the media reports, there are 10 observations issued to the company’s Bachupally facility, by the United States Food and Drug Administration, for which the authority has also issued form 483. The observations range from unclean equipment and utensils to failure in explaining any unexplained discrepancy.
The brokerage firm Antique believes that some of the observations issued by the USFDA were severe and can lead to a warning letter for the Bachupally facility. Furthermore, the brokerage firm added that the observations highlighting issues of microbial contamination and the state of the manufacturing unit along with problems with data integrity and market complaints were serious.
The Bachupally unit is a critical site for Dr Reddy’s as it contributes 30 percent of its overall revenue from the US and manufactures more than 100 products for the drugmaker company including four of its top 10 products the generics of Ciprodex, Nexium, Valcyte and Toprol.
Coming onto the company’s financial statements, the revenue increased marginally by around 2 percent from Rs. 6,758 crores in the June quarter to Rs. 6,903 crores during the September quarter. In addition, the net profit increased by 5 percent from Rs. 1,405 crores to Rs. 1,482 crores during the same timeframe.
The company plans to focus on licensing and collaborating with partners to bring innovation to India and strengthen its presence in the generic business. Moreover, the company is actively participating in processes for inorganic activities and is looking for complementary deals to support its organic strategy.
Headquartered in Hyderabad, Dr Reddys Laboratories Ltd was incorporated in 1984. The company is a leading India-based pharmaceutical company that offers a portfolio of products and services, including Active Pharmaceutical Ingredients (APIs), Custom Pharmaceutical services (CPS), generics, biosimilars and differentiated formulations.
Written By Vaibhav Patil
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