Dr Reddy's Lab extends fall on getting warning letter from USFDA

The stock dipped nearly 5% to Rs 3,462, extending its Friday's 15% fall on the BSE.

Shares of Dr Reddy’s Laboratories has dipped nearly 5% to Rs 3,462, extending its Friday’s 15% fall on the BSE, after the company has received a warning letter issued by the US Food and Drug Administration (USFDA), relating to its three plants Srikakulam, and Miryalaguda, Telegana along with the oncology formulation business at Duvvada.

Dr Reddys has mentioned that it will respond to the letter in 15 days. The company has said that Srikakulam facilities itself contribute around 10-12% of sales of the company.

Brokerages are likely to downgrade the earnings estimates for FY16 following this development. Already the company has been facing the heat because of ongoing compliance issue. In the Q2 earnings call, the company management had disclosed that FDA had withdrawn product approvals of two of its active pharmaceutical ingredient (API) customers. CLICK HERE TO READ FULL REPORT.

Meanwhile, Dr Reddy’s Laboratories said that it will hold a conference call today on November 9, 2015 to clarify investors queries on the warning letter issued by the USFDA dated November 5, 2015.

At 01:17 PM, the stock was down 3.9% at Rs 3,490 as compared to 1.2% fall in the S&P BSE Sensex. A combined around two million shares changed hands on the counter on the BSE and NSE.