India's largest drugmaker Sun Pharmaceutical Industries Ltd.'s shares slipped on Monday, June 16, after the US Food and Drug Administration (US FDA) issued eight observations on the pharma player's Halol manufacturing facility in Gujarat.
Sun Pharma, in a regulatory filing, said the US FDA conducted a Good Manufacturing Practices (GMP) inspection at its Halol facility between June 2 and June 13, 2025. The inspection concluded with the issuance of a Form 483 containing eight observations, pointing to possible procedural or documentation issues requiring corrective action.
The Halol plant, one of the company’s largest manufacturing sites, has previously faced regulatory scrutiny and has been under an import alert since a warning letter was issued in May 2022, barring exports to the US. Sun Pharma stated it will address the observations and take all necessary corrective measures.
The US FDA imposed an import alert on the plant after the inspection in April-May 2022 and later classified it as OAI (Official Action Indicated) in August 2022. In that inspection, the US FDA had issued 10 Form 483 observations. The observations were on production systems, facility and equipment, quality control processes, and lab control systems. The facility has remained classified as OAI since March 2020.
Even during the December 2019 inspection, the USFDA had issued eight Form 483 observations. The site has had multiple adverse regulatory outcomes in the past. It had received a warning letter in 2015 as well.
At 9.16 am, shares of the firm were quoting Rs 1,675.5, down 0.75 percent on the NSE.
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Swiss brokerage UBS has maintained a buy call on Sun Pharma with a target price of Rs 2,450 per share, following the recent key leadership changes by the management. The company’s Halol facility inspection resulted in eight observations, and the nature of these findings will be critical in the near term, added the brokerage.
Sun Pharma also has manufacturing exposure in Israel through its subsidiary Taro. Meanwhile, investors are closely watching for clarity on potential US tariffs on branded drugs, with an official announcement expected next month.
Sun Pharmaceutical Industries also announced a significant leadership transition, appointing Kirti Ganorkar as Managing Director, effective September 1, 2025. The founder, Dilip Shanghvi, will step down from the role and continue as the Executive Chairman of the Board.
Nomura expects Kirti Ganorkar to be in the role of Managing Director over the next 4-5 years, after which it expects Aalok Shanghvi to eventually take over the role. Aalok Shanghvi’s role has been expanding in the company, and he is being prepared to head the company’s execution eventually. "We expect the promoter and management to remain unseparated at Sun Pharma," added the brokerage.
Discussing the US FDA action, Nomura said, "We think the Street currently does not expect any material upside from the resolution of the site. Therefore, in case of an adverse outcome, any potential downside is unlikely to be significant."
"Even on the upside, in case the site is cleared by the USFDA, we think the impact can only be marginally positive. Any positive impact from revenue upside from the site would be immaterial now, given the large base of the company."
The brokerage kept its 'neutral' rating intact, with a price target of Rs 1,970 per share.
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