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In the past one month, the market price of Lupin fell by 23%, while of Glenmark Pharmaceuticals by 12% on account of negative news flow from the US health regulator. By comparison, the S&P BSE Sensex was down 2% during the same period.
On November 7, Lupin said that the US Food and Drug Administration (USFDA) had issued a warning letter to the company against a violation of current good manufacturing practice norms at two of its manufacturing facilities in Goa and Indore.
In a letter to Lupin, USFDA said inspectors during an inspection from March 27 to April 7, found significant violations of current good manufacturing practice (CGMP) regulations for finished pharmaceuticals.
“Although the warning letter will not disrupt drug supplies from the affected plants, it will dent drug approvals. There is a possibility of a delay in drug approvals for other plants as well (particularly the adjacent two units in Pithampur). Lupin’s US business is already under pressure due to competition and pricing challenges. The warning letter makes its US business (>45% sales contribution) outlook bleak,” analysts at Phillip Capital in recent report and maintain ‘neutral’ rating on the stock.
Glenmark Pharmaceuticals was trading 1% lower at Rs 549, extending 6% decline in past four trading sessions, after the company said its Baddi unit gets seven observations from USFDA through the form 483.
The Baddi unit of Glenmark Pharmaceuticals underwent an US FDA audit from November 6, 2017 to November 11, 2017. The Baddi unit contributes approximately 10% of the revenue of US sales. The company said it is in the midst of providing a comprehensive response to the observations and would be replying to the FDA shortly on the observations.