Dr Reddy's tanks 15% post warning letter from USFDA

Moneycontrol BureauShares of pharma major Dr Reddy's Laboratories plunged 15 percent intraday Friday as it has received a warning letter from USFDA."The warning letter is relating to its API manufacturing facilities at Srikakulam, Andhra Pradesh and Miryalaguda, Telangana, as well as Oncology Formulation manufacturing facility at Duvvada, Visakhapatnam, Andhra Pradesh," as per BSE release. The action follows the earlier inspection of these sites by agency in November 2014, January 2015 and February 2015, respectively.G V Prasad, CEO, Dr Reddy's Laboratories said, "We take quality and compliance matters seriously and stand by our commitment to fully comply with the cGMP quality standard across all of our facilities. We will respond with a comprehensive plan to address these observation within the stipulated time-frame of 15 days."Surajit Pal, pharma analyst, Prabhudas Lilladher, says this comes as a surprise because investors were focussing on Srikakulam, but nobody ever said a word on the other facilities. "The last time when the management had interacted, they were very confident in terms of their interactions and work activities and were sure that the next visit would give them clearance or resolution," he told CNBC-TV18.Pal says it appears as though their complex product, especially oncology product, will be at risk — maybe not in the immediate future — if they can't resolve it. There also seems to be lack of disclosure as far as the other two facilities are concerned. "Given the public information, the other two plants were never mentioned in their communications. That is a concern because management did not disclose even if these facilities were discussed/ or they interacted with outside parties." DRL's total sales to the US is around USD 450 million per quarter. Pal says US injectibles business gives DRL around USD 250 million revenue per year.At 10:25 hrs Dr Reddy's Laboratories was quoting at Rs 3,821.95, down Rs 430.65, or 10.13 percent on the BSE.Posted by Rakesh Patil