Shares of Granules India slipped 3 percent on March 5 after details of the US Food and Drug Administration's warning letter for the company's Gagillapur unit revealed a series of serious lapses.
The US FDA's warning letter highlighted issues related to data integrity, quality and significant contamination being found in the site under review. Further, the US drug regulator also found the manufacturing site failed to be in a good state of repair and also to establish and follow adequate procedures.
These concerns raised in the FDA's warning letter has sparked fears of the unit getting under an import ban, if the lapses, serious in nature are not resolved under the stipulated time. Given that the Gagillapur unit contributes a staggering 70 percent of revenue for Granules India, any negative regulatory action could cause damage to the drugmaker's earnings growth.
At 10.30 am, shares of Granules India were trading at Rs 459.20 on the NSE.
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The US FDA had issued a warning letter to Granules' Gagillapur unit on February 28 following an inspection conducted in August 2024, the details of which were revealed today. The stock had taken a sharp beating following the warning letter as it tanked 9 percent.
The classification of "Official Action Indicated" (OAI) remains, but the regulator has not signalled any further escalation. The company stated that it will respond within the stipulated timeframe and seek a meeting with the FDA to demonstrate its ongoing compliance efforts.
In December 2024, Granules India announced that its Gagillapur facility in Telangana had been classified as "Official Action Indicated" (OAI) by the US FDA. This followed a form 483 issued in September 2024, which highlighted six observations at the site.
While the warning letter may delay the FDA’s review of pending product submissions from the facility, the manufacturing and distribution of existing products will continue without disruption.
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