Cipla, which tanked over 7 percent in the previous session after details of US FDA’s warning letter emerged, showed recovery as they gained on November 24 after HSBC maintained 'buy' rating on the stock.
At 9:40 am, Cipla shares were trading 1.4 percent higher at Rs 1,187.10 on the National Stock Exchange. While HSBC retained its 'buy call on the stock, it cut the target price to Rs 1,425 from Rs 1,440 earlier on concerns over a lengthy resolution of the issues raised by the American regulator and incremental costs.
The United States Food and Drug Administration’s letter, issued earlier this month, underlined data integrity issues at Cipla embedded with product complaints and microbial contamination.
The letter followed a routine good manufacturing practices inspection of the firm’s Pithampur facility in February 2023. Cipla received eight inspectional observations in Form 483.
Also Read | Cipla tanks almost 7% as USFDA's letter flags data issues at Madhya Pradesh unit
According to USFDA's website, Form 483 is issued after an investigator observes conditions that may constitute violations of the Food Drug and Cosmetic Act and related Acts.
The pharma giant had said earlier that it would work closely with the USFDA and address these comprehensively within the stipulated time.
According to analysts at HSBC, the details came as a setback for Cipla. "We don’t assume additional risk for Gadvair for which, site transfer is underway," it said. The positive traction observed in its key marketed products is expected to bolster sales in the United States in FY24-26, it said.
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In the past week, Cipla has declined around 6 percent. For the year, the share price has risen 9.6 percent, marginally higher than the benchmark Nifty’s 8.8 percent gain during the period.
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