Claris offer scrapes through, subscribed 1.5 times

The initial public offering (IPO) of Ahmedabad-based Claris Lifesciences managed to scrape through on Thursday, as most investors preferred to skip the issue on concerns about the warning letter issued by the US drug regulator and corporate governance.

The issue was subscribed 1.5 times, according to the data available on the National Stock Exchange website. Category-wise subscription numbers were not available till 7.00 pm.

Earlier, the maker of sterile injectables was forced to extend the issue closure till Thursday (from November 26) and slash the price band by about 20 per cent to Rs 228-235 due to poor response from investors. The Claris IPO had opened on November 24 with a price band of Rs 278-293.

Sector analysts say the issue struggled as the US Food and Drug Administration (USFDA) recently issued a warning letter to the company for not complying with the current Good Manufacturing Practices (cGMP) norms. The violations cited by USFDA are potent enough to affect Claris’s long-term contract with the leading drug maker Pfizer, they note. “If companies like Ranbaxy have not been able to address issues raised by USFDA in two-three years, it will be difficult to put the house in order for relatively smaller companies like Claris. Further, they are making injections that directly go into the blood stream and, hence, cannot compromise on quality,” said Ranjit Kapadia, vice-president, Institutional Research, HDFC Securities.

In November, the company’s manufacturing facilities at Ahmedabad received the USFDA warning letter for violation of the cGMP regulations. USFDA also issued import alerts on Claris’s certain products distributed through partners.

The company’s registration and products were suspended by the Drug and Food Control, Ministry of Health, State of Kuwait, between June and August. Concerns over corporate governance also hurt the offer, say experts. Core Healthcare, promoted by Sushil Kumar Handa, is listed on www.watchoutinvestors.com, a portal run by the corporate affairs ministry for regulatory non-compliance. Arjun Handa, the present promoter of Claris, is the son of Sushil Kumar Handa.