Alkem Labs falls 8% on 13 observations from USFDA for Daman unit

The company said it would put together a detailed response with adequate corrective and preventive measures to address the USFDA observations and the same is proposed to be filed within the timeline stipulated by USFDA.

Daman facility contributed around 30 percent to company's US revenue in FY16 and 6 percent to total revenue. Also, around 50 percent of Alkem's pending ANDAs have been filed from this facility.

"Crestor approval is due from this facility in early November; if observations are not critical in nature, then the company should get final approval. There will be better clarity on 483 observations once they are made available by the US FDA," Motilal Oswal said.

Apart from Daman, the company has zero pending 483s across its facilities. In August, had received inspection report for its bioequivalence facility at Taloja, Maharashtra and there were no 483s issued by the USFDA. Other key facility in Baddi was inspected by the US FDA in 2HFY15 and has already received Establishment Inspection Report (EIR).Motilal Oswal said it continued believing that Alkem is the best way to play the domestic growth story (around 72 percent of revenue and more than 90 percent of EBITDA came from India in FY16).However, given the around 50 percent run-up in the stock over the past five months, the brokerage house has downgraded the stock to neutral as uncertainty related to US FDA action may keep the stock rangebound in the near term. It has maintained target price of Rs 1,800.At 10:10 hours IST, the scrip of Alkem Laboratories was quoting at Rs 1,735.00, down Rs 69.05, or 3.83 percent on the BSE.Posted by Sunil Shankar Matkar