Shares of Indoco Remedies Ltd. fell to the lowest level in nearly two years after the drugmaker received a warning letter over manufacturing practices at its Goa plant from the U.S. Food and Drug Administration (FDA).
The U.S. FDA's warning on March 27 was based on an inspection of the facility (Plant II & Plant III) in Verna, Goa, the company said in a filing on Friday. It received six observations, which do not pertain to data integrity. While the U.S. FDA accepted Indoco's response to four, the regulator issued a warning letter on two observations over good manufacturing practices requirement, the company said.
Its shares fell as much as 16.32 percent to Rs 208.50 during morning trades on Monday, the lowest since June 1, 2015. The pharma company was the top loser among the BSE 500 companies.
The two observations pertain to opthalmic drug Latanoprost, for which the company is a contract manufacturer, Sundeep V. Bambolkar, joint managing director, Indoco Remedies, said in a conference call on Monday. The drug's sales stand at Rs 25 crore per annum, the company said, without sharing the name of the front-end selling partner.
As per U.S. FDA advice, the company is in the process of appointing consultants to help meet the current good manufacturing practices requirement, he said. The company will submit its response to the warning letter within the stipulated 15 days.
The Goa plants II and III have a revenue exposure of Rs 75 crore, or about 68 percent, to the U.S. market. A total of 18 drugs are manufactured at the plants, of which applications for nine are pending approvals. While Indoco Remedies continues to sell drugs in the U.S. from these plants, new approvals are likely to get impacted, the management said.
It is safe to assume that the warning letter is restricted only to one product... the warning letter is not very harsh either; FDA is only asking for more details. The profit contribution of this plant is lower as overall, the U.S. business contributes ~10% to total sales. There are no disruptions in supplies as of now. Expect delay in approvals in the pipeline.Aditi Panandikar, Managing Director, Indoco Remedies.
Indoco Remedies' shares were trading nearly 9 percent lower at Rs 228 at 2 pm.
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