Cipla falls 4%, nears 52-week low on concerns of product launch delay in US

In the past seven trading days, the stock has dipped 11% after the United States Food and Drug Administration issued Form 483 with 8 observations for the company's Pithampur manufacturing facilities

Shares of Cipla slipped 4 per cent to Rs 910.10, hitting an over eight-month low on the BSE in Tuesday's intra-day trade, on concerns of product launch delay in the US. The stock of the pharmaceutical company was trading at its lowest level since June 20, 2022. It was quoting close to its 52-week low of Rs 890, touched on May 11, 2022.

In the past seven trading days, the stock price of Cipla has dipped 11 per cent after the company, on February 18, said that the United States Food and Drug Administration (US FDA) has issued Form 483 with 8 observations after the inspection of its Pithampur manufacturing facilities. Cipla's Pithampur plant is one of the most important plants for the company, besides Goa plant.

US FDA conducted a current Good Manufacturing Practices (cGMP) inspection at the company's Pithampur manufacturing facility from 6th - 17th February, 2023.

"On conclusion of the inspection, the company received 8 inspectional observations in Form 483. The company will work closely with the US FDA and is committed to address these comprehensively within stipulated time," Cipla said.

The company's Pithampur plant is estimated to be contributing around 5 per cent of the revenue and around 15 per cent of Ebitda for FY2023. The plant manufactures its blockbuster respiratory products such as Albuterol and Arformoterol; and gAdvair, which is soon to be launched, has been filed from the same plant.

"The plant has come under the US FDA scanner is expected to delay gAdvair's launch. The company is already facing a delay in the launch of its key oncology product, gAbraxane, as its Goa plant is under the US FDA OAI status since August 2022," Sharekhan said in a company update.

Cipla has witnessed slower growth in its India Pharma market's (IPM) sales as well in January 2023, compared with industry's average growth. IPM growth will continue to be a key monitorable going forward, it said.

Lower-than-expected growth in India's market share and specialty segment's revenue growth; currency risk; and delay in the resolution of US FDA observations at its plant are key risks, Sharekhan said while maintaining a 'hold' rating on the stock. Cipla, however, is trading below the brokerage firm's reduced price target of Rs 1,080 (vs. earlier Rs 1,158).