Shares of Wockhardt rallied 5.4 percent intraday Thursday after the US health regulator has not found any issues at Chikalthana plant.
Shares of Wockhardt rallied 5.4 percent intraday Thursday after the US health regulator did not find any issues at Chikalthana plant. The stock hit a 52-week high at Rs 1980.
The drug maker on Wednesday said there were no findings with respect to data security and control measures in laboratory and manufacturing at Chikalthana plant in a recent inspection by US Food and Drug Administration (USFDA). However, the US health regulator suggested continuous voluntary compliance for "desired quality culture".
According to the pharma firm, the recent inspection at the Aurangabad L1-Chikalthana site was a follow-up inspection by the US FDA as an outcome of completion of good manufacturing practise (GMP) remediation submitted by Wockhardt in October 2014.
In November 2013, the company had received an import alert on the manufacturing unit at L-1, Chikalthana plant at Aurangabad in Maharashtra and related warning letter from USFDA due to non-compliance of good manufacturing practice.
"The efforts for data security control has been thoroughly verified during the inspection and have been appreciated as it qualified and executed since September 2013. The observations on Form 483 are on products manufactured prior to execution and implementation of GMP remediation program," Wockhardt explained.
The firm further said, "The agency (USFDA) has indicated a common goal as voluntary compliance which shall be a continual process facilitating the concept of 'right the first time and every time' leading to desired quality culture."
This (Chikalthana) is a key facility for Wockhardt as it was the largest contributor to US sales (around USD 250 million sales) before getting import alert in November-13.
"Early inspection at this facility comes as a positive surprise," said Macquarie. "We have not built opening up of L1 till FY17E end. If Wockhardt is able to resolve regulatory issues at this facility by FY16E end this could definitely be a big booster to earnings," it explained.
According to the brokerage, no issues related to data integrity is a positive step forward. It expects Wockhardt to respond to the observations and implement what is desired by the FDA over the next couple of months.
Chikalthana facility has already been approved by the UK MHRA last quarter.
Macquarie has kept its target on the stock as it is at Rs 1,700. According to the report, US FDA clearance at Shendra and L1 facility are the key factors.
"While early L1 inspection is a positive, timeline for its eventual clearance remains key which we believe is at least few quarters away. Current margins of Wockhardt is not reflective of inherent potential of this business given the operating leverage driven by US ramp-up and better asset utilisation," it explained.
At 11:12 hours IST, the scrip of Wockhardt was quoting at Rs 1,936.05, up Rs 57.70, or 3.07 percent on the BSE.
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