Cadila’s shares down by 15%.
AB Wire
Shares of Cadila Healthcare Ltd., headed by billionaire Pankaj Patel, plunged by 15% – its steepest drop on record – after receiving a warning letter from the U.S. Food and Drug Administration for two of its plants in Gujarat.
FDA targeted pharma company Cadila’s Moraiya formulation facility and Ahmedabad plant, according to an exchange filing Thursday, reported Bloomberg News. No products, which use active pharmaceutical ingredients, or API, from the Ahmedabad plant, are available in the U.S. market.
Cadila’s shares plunged 15 percent to 326.1 rupees at 2:06 p.m. on Thursday in Mumbai, the worst performance in the MSCI Emerging Markets Index. The FDA’s scrutiny of other Indian drugmakers, including Sun Pharmaceutical Industries Ltd. and Dr. Reddy’s Laboratories Ltd., fueled a selloff in their shares last month. Sun slid 18 percent in November and Dr. Reddy’s tumbled 27 percent, the Bloomberg report said.
“The future pipeline and growth from the U.S. would be impacted because of the warning letter,” Surya Patra, an analyst at PhillipCapital India Pvt. in Mumbai, was quoted as saying. “We will review our neutral rating on the stock and the price target after the conference call with the company.”
“The company is working hard to ensure that the commitments made to U.S. FDA are fully completed,” the filing said.
Cadila, based in Ahmedabad, will take steps so that the FDA is satisfied with its remediation of the two facilities, it said. Patel has a net worth of $4.5 billion, according to the Bloomberg Billionaires Index.
Reuters reported that dozens of Indian drug plants have faced warnings and bans in recent years, as the FDA improved inspections of foreign facilities. More than 40 percent of the generic and over the counter medicines available in the United States comes from Indian facilities such as Cadila’s Moraiya plant.
Patel told analysts on a conference call the FDA, during an inspection of the Moraiya plant in September 2014, found deficiencies with the way the company investigated market complaints about a medicine made there.
A batch of that medicine repeatedly failed a manufacturing-related test, after which the company stopped producing it, Patel said on Thursday, without naming the product.
At the other plant cited in the letter, where Cadila makes raw materials for finished drugs, Patel said the company had already identified problems and was working on fixing them before the FDA came to inspect, Reuters reported.