Ipca slumps after FDA bans U.S. imports from two plants

By Abhishek Vishnoi and Zeba Siddiqui

MUMBAI (Reuters) - The U.S. Food and Drug Administration has banned most imports from two of drugmaker Ipca Laboratories Ltd's production plants, sending its shares sliding as much as 14.5 percent on Wednesday.

In a post on its website on Tuesday, the agency said generic medicines from the Ipca plants, in Pithampur in Madhya Pradesh and Silvassa in Dadra and Nagar Haveli, were banned as they did not comply with the FDA's standard drug manufacturing practices. The agency, which doesn't say publicly why treatments don't comply with its rules, banned imports from another of Ipca's 12 plants in India in January.

In the past two years the FDA has stepped up scrutiny of India's pharmaceutical sector, which supplies about 40 percent of drugs sold in the United States. Some of India's largest drugmakers have faced sanctions over issues from hygiene levels and concealment of data on failed tests to fabrication of records.

In a statement issued on Wednesday, Ipca, a mid-sized drugmaker, said "the company is fully committed in resolving this issue at the earliest".

Ipca didn't disclose details of exports from the two factories affected. The Silvassa plant supplies only to the United States, while the Pithampur plant exports only "marginally" to Europe, according to Ambit Capital analyst Aditya Khemka.

In a conference call, Ipca officials said they plan to ensure the plants affected are FDA-compliant by December.

But analysts estimated it could take about two years for Ipca to get its plants back on track for potential full resumption of exports to the United States.

Despite the negative sentiment around the stock, they said the impact on earnings may be limited, as the FDA has exempted two key medicines from the ban, a treatment for auto-immune disorders and a heart drug.

Shares in Ipca closed 13.8 percent lower at 663.60 rupees in a Mumbai market that fell 0.14 percent.

(Editing by Kenneth Maxwell)