Moneycontrol Bureau
Shares of Sun Pharma continued to rally for second day after it lost almost 7 percent on Monday following a warning letter by US Food and Drug Administration (FDA) on Halol manufacturing unit. The drug major rose 3 percent intraday on Wednesday after analysts found no serious compliance breach in the warning letter. Most analysts were still positive on the stock after the warning letter was issued but were waiting for details.
On December 22, the USFDA made public the warning letter which states that inspection 483 mentioned 23 observations. Out of the 23 observations, 10 were related to the injectables facility, 4 were on the oral solids facility, 8 were related to quality control labs and 1 was on warehousing.
In its letter, the drug regulator said that Sun Pharma failed to establish and follow appropriate written procedures and all lapses are examples of serious current good manufacturing practice (cGMP) violations. It also added that the company's responsibility to ensure third party audit includes full evaluation of systems, operations and procedures.
However, Nomura says that lower number of observations as a positive. "The wording of the warning letter suggests that the initial response of the company was assessed in detail but we aren't sure how much cognizance the FDA gave to subsequent responses," it says in a note.
Nomura believes that the FDA's key concern is around the possibility of contamination in injectables and a lack of robustness in the quality control process. It adds that Sun Pharma will be required to carry out more studies to meet some of the FDA requirements. However, it says resolution by FY17 remains a possibility.
Halol is the largest formulation site for Sun Pharma and currently contributes USD 300-400 million in sales and all injectable ANDAs are filed from the site. Kotak also feels that USFDA has not highlighted any systemic multi plant issue and is confined to Halol unit only. The FDA will review remedial measures taken on its follow up re-inspection and the statements on re-inspection itself should reduce chance of import alert atleast.
At 12:23 hrs Sun Pharmaceutical Industries was quoting at Rs 787.25, up Rs 23.10, or 3.02 percent on the BSE.Posted by Nasrin SultanaFollow @NasrinzStory
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
