Dr Reddy's slips 7% following 8 USFDA observations for Duvvada plant

The stock slipped 7% to Rs 2,425 on the BSE after the pharmaceutical company said US health regulator issued eight observations after inspecting its formulations plant at Duvvada, Visakhapatnam.

Shares of Dr. Reddy’s Laboratories have slipped 7% to Rs 2,425 per share on the BSE in early morning trade after the pharmaceutical company said that the US health regulator issued eight observations after inspecting its formulations plant at Duvvada, Visakhapatnam.

"The audit of our formulations manufacturing facility at Duvvada, Visakhapatnam, by the US Food and Drug Administration (USFDA), has been completed today. We have been issued a Form 483 with 8 observations, which we are addressing," the company said in a filing.

As per the USFDA, Form 483 is issued to a firm's management at the conclusion of an inspection when the investigator has observed any conditions that in its judgment may constitute violations of the Food Drug and Cosmetic (FD&C) Act and related Acts.

Dr. Reddy’s had outperformed the market in the past four trading days post-September quarter (Q2FY19) results, by gaining 8.5%, as compared to a 0.6% rise in the S&P BSE Sensex. Post results, most of the brokerage houses were bullish on the stock with a 12-month target price in the range of Rs 2,700 to Rs 2,850.

The fresh round of concerns raised by the USFDA inspectors over the Oncology formulations facility comes as a big set back to the company.

At 10:00 am; Dr. Reddy’s was trading 5% lower at Rs 2,464 on the BSE, as compared to 0.66% decline in the benchmark index. A combined 675,955 equity shares changed hands on the counter on the BSE and NSE so far.