The shares of Granules India crashed over 8 percent on February 28 after the company announced that it has received a warning letter from the US Food and Drug Administration (FDA) for its Gagillapur facility in Hyderabad, following an inspection conducted in August 2024.
In an exchange filing released in the post market hours of February 27, the pharmaceutical company announced that the US FDA had issued the letter the previous day. While the facility remains classified as "Official Action Indicated" (OAI), the regulator has not signalled any further escalation, the statement read.
Granules added that manufacturing and distribution of its existing products at the facility will continue unaffected. However, the warning letter may temporarily impact FDA's review of its pending product submissions from the site until the issue is resolved.
"We will respond within the stipulated timeframe and seek a meeting with the FDA to demonstrate ongoing progress towards compliance. We remain confident that this matter will be resolved satisfactorily within a reasonable timeframe," Granules further said.
The warning letter highlighted four key concerns from the initial six observations noted in the FDA's Form 483. Granules has claimed that it has made significant progress in addressing these issues, with most corrective measures completed and the remaining ones on track. The company has also been providing monthly updates to the regulator.
After the inspection last year, the company had voluntarily paused production and dispatches in September 2024 to conduct a thorough risk assessment. Since then, it has implemented a comprehensive remediation plan. This includes corrective and preventive actions (CAPAs), oversight from three independent consulting firms, continuous product testing and monthly updates to FDA.
"Granules' growth trajectory remains robust and diversified, underscoring that our strategy is not solely dependent on new product approvals from the Gagillapur site," the company said.
In another exchange filing, the company announced that it has received a communication from the GST authorities for the closure of the investigation proceedings after making a payment of dues worth Rs 3.27 crore, related to the "erroneous availment of refund for accumulated ITC".
Granules also announced the resignation of Sethu Madhavan Sankaran as the Senior Vice President and Head of API Manufacturing and Operations.
The shares of the company were trading at Rs 465 apiece, as seen at 2.46 pm on February 28. The decline in the stock's price comes amid a market downturn.
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