Wockhardt stock hits record low on US regulator notice
FDA says it may withhold nods for any new launches Wockhardt is planning for US until the firm addresses concerns about Waluj plant
Shares of Wockhardt Ltd plunged to all-time low on Wednesday, after the US Food and Drug Adminstration disclosed details of its warning letter over the former’s factory at Waluj.
The shares closed at Rs 660 on BSE; on Monday, these had closed at Rs 808.3, down nine per cent. In its letter dated July 18, the FDA said it might freeze approvals for any new launches Wockhardt was planning in America until the company addressed its concerns about the Waluj plant. FDA also recommended Wockhardt hire independent auditors to review its operations at Waluj and asked the company to detail its plan for an upgrade.
On Saturday, Wockhardt had said with reference to the earlier announcement dated May 24 regarding an import alert from the US drug regulator on Waluj, that the company had received a warning letter, which listed the observations made during an inspection at the facility.
Also, earlier this month, Britain’s Medicines and Healthcare Products Regulatory Agency (MHRA) had issued an import alert on the same unit. With Wednesday's closing price, the market cap of Wockhardt has fallen 67 per cent to Rs 7,241 crore from the Rs 21,979 crore in March, the highest ever market cap since April 2012.
According to Habil Khorakiwala, chairman, there will be an annual loss of Rs 100 crore due to the MHRA alert on Waluj. And, the US FDA import alert will cause an annual loss of $100 million (Rs 600 crore).
In its research note, Citigroup has said Wockhardt could take about two years to fully address the FDA's concerns. Macquarie Equities Research has downgraded the stock to 'neutral' from 'outperform' and cut the target price by almost half to Rs 750.
THE WALUJ PROBLEM
US Food and Drug Adminstration (FDA) in its letter dated July 18 said it might freeze approvals for any new launches Wockhardt was planning in America until the company addressed its concerns about the Waluj plant
FDA also recommended Wockhardt hire independent auditors to review its operations at Waluj and asked the company to detail its plan for an upgrade
Earlier this month, the UK's Medicines and Healthcare Products Regulatory Agency had issued an import alert on the Waluj unit