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Dr Reddy's hits 52-week high after USFDA issues EIR for Srikakulam facility

The company said, with this, all facilities under warning letter are now determined as Voluntary Action Indicated (VAI)

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SI Reporter  |  Mumbai 

Dr Reddy's
The stock surpassed its previous 52-week high of Rs 4,095, touched on April 22, 2020

Shares of Dr Reddy’s Laboratories rallied 8 per cent and hit a 52-week high of Rs 4,132 on the National Stock Exchange (NSE) on Friday after the company received the Establishment Inspection Report (EIR) from US health regulator for its manufacturing plant at Srikakulam. The drug maker's stock surpassed its previous high of Rs 4,095, touched on April 22, 2020.

“The company has received the Establishment Inspection Report (EIR) from the US Food and Drug Administration (USFDA), for the Active Pharmaceutical Ingredients (API) manufacturing plant at Srikakulam, Andhra Pradesh (CTO VI), indicating closure of the audit and the inspection classification of this facility is determined as "Voluntary Action Indicated" (VAI),” Dr Reddy’s Laboratories said in a regulatory filing.

The site was issued warning letter in November, 2015 after the inspection in 2014, and was under "Official Action Indicated" classification till now. With this, all facilities under warning letter are now determined as VAI, it said.

Analysts at Anand Rathi Share and Stock Brokers believe the US business which has been facing revenue pressure, is likely to rebound with new product launches and gradual normalization of price erosion in its key products. Also, Dr Reddy’s should continue to witnesses strong growth in India, emerging markets, Europe and PSAI business driven by volume growth, new launches and improving realizations.

While the deal with Wockhardt strengthens India business, other strategic initiatives of the company focused on building healthy product pipeline, improving efficiency and cost controls, divesting on-core assets and engaging with USFDA to resolve outstanding concerns, create further optimism, the brokerage firm said in value pick.

At 09:42 am, Dr Reddy’s was trading 4 per cent higher at Rs 3,970 on the BSE, as compared to 1.5 per cent rise in the S&P BSE Sensex. A combined around 600,000 equity shares have changed hands on the counter on the NSE and BSE.

First Published: Fri, May 08 2020. 09:45 IST
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