IPCA Labs Slumps As U.S. Drug Regulator Bans Drugs From Three Plants

Ipca Laboratories Ltd. stock slumped to the lowest level in nearly a year after the U.S. regulator denied admission to drugs made at three of its plants.
All drugs made at active pharmaceutical ingredient plant at Ratlam and formulations units at Pithampur and Piparia will be “refused admission into the U.S. (without any exception) until” the company complies with the Food and Drug Administration's current good manufacturing practice regulations, Ipca Labs said in its exchange filing.

However, the U.S. drug regulator has left the room open for export of anti-malarial drug ingredient Chloroquine Phosphate in case of shortage, or medical necessity, the company added.

Financial Impact

The FDA had issued import alerts for the three manufacturing units in 2015, and subsequently, put out warning letters in February 2016. But Ipca Labs had stopped shipping ingredients or formulations, except those exempted from the import alert, since July 2014. The Mumbai-based drugmaker clocked $10 million in sales in the U.S. in the financial year 2016-17, that works out to less than 5 percent of the firm's annual revenue.

The company will now have to reapply for FDA inspection of its plants, thereby delaying possible resolution of its regulatory worries.

Shares of Ipca Laboratories slumped as much as 15.35 percent to Rs 436.1 before paring losses to 7.9 percent as of 10:20 a.m.

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