Dr Reddy's Lab extends slide as USFDA seeks audit across manufacturing network

Dr Reddy's Laboratories lost 4.02% to Rs 3,365 at 13:25 IST on BSE, with the stock extending its intraday slide after the US drug regulator ordered a third-party audit across the manufacturing network of the company.

Meanwhile, the BSE Sensex was down 236.41 points, or 0.91%, to 25,884.99

On BSE, so far 1.18 lakh shares were traded in the counter, compared with an average volume of 30,762 shares in the past one quarter.

The stock hit a high of Rs 3,494.90 and a low of Rs 3,324.70 so far during the day. The stock hit a record high of Rs 4,382.95 on 20 October 2015. The stock hit a 52-week low of Rs 3,010 on 9 February 2015.

The stock had underperformed the market over the past one month till 9 November 2015, sliding 17.52% compared with 3.54% decline in the Sensex. The scrip had also underperformed the market in past one quarter, falling 17.71% as against Sensex's 7.49% decline.

The large-cap company has an equity capital of Rs 85.29 crore. Face value per share is Rs 5.

In a conference call held yesterday, 9 November 2015, Dr Reddy's Laboratories' CEO GV Prasad said that the third-party audit across the manufacturing network of the company is going to take significant effort and time. Any corrective measure will be implemented at all the company's sites, G V Prasad said. The company is in the process of shifting some of the products to other plants in the wake of warning letters, he said.

The US drug regulator US Food and Drug Adminisration (USFDA) has given the company some areas they would like us to field specifically: it is in the area of third-party evaluation of product quality, and third-party verification of some of the actions we have taken, chief executive officer G.V. Prasad said on Monday

Shares of Dr Reddy's Laboratories have been on a declining spree triggered by the company receiving a warning letter issued by the US drug regulator relating to its two manufacturing facilities. The announcement was made during market hours on Friday, 6 November 2015. The stock had tumbled 14.65% to Rs 3,629.55 on Friday, 6 November 2015. The stock has declined 22% in three trading sessions from Rs 4,314.35 on Thursday, 5 November 2015.

On Friday, 6 November 2015, Dr Reddy's Laboratories announced that it has received a warning letter issued by the USFDA dated 5 November 2015 relating to the company's active pharmaceutical ingredients (API) manufacturing facilities at Srikakulam in Andhra Pradesh and Miryalaguda in Telangana, as well as oncology formulation manufacturing facility at Duvvada in Visakhapatnam, Andhra Pradesh. This action follows the earlier inspections of these sites by USFDA in November 2014, January 2015 and February 2015 respectively, Dr Reddy's Laboratories said in a statement.

Dr Reddy's Laboratories' consolidated net profit rose 25.7% to Rs 721.89 crore on 11.2% growth in net sales to Rs 3988.96 crore in Q2 September 2015 over Q2 September 2014.

Dr Reddy's Laboratories is an integrated global pharmaceutical company. Through its three businesses - Pharmaceutical Services & Active Ingredients, Global Generics and Proprietary Products - Dr Reddy's offers a portfolio of products and services including APIs, custom pharmaceutical services, generics, biosimilars and differentiated formulations.

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