Lupin falls 3% as USFDA issues 5 observations for Vizag facility

Shares of Lupin slipped 3 per cent to Rs 742 on the BSE on Monday in the intra-day trade after the drug company said it has received five observations from the US health regulator after inspection of its Vizag facility in Andhra Pradesh.

“The United States Food and Drug Administration (USFDA) carried out the inspection of the company’s Vizag API manufacturing facility between January 13, 2020 and January 17, 2020. The inspection for the API facility at Vizag closed with five 483 observations,” Lupin said in an exchange filing on Saturday.

“We are fully committed to adherence with CGMP regulations and uphold high quality standards across all our manufacturing sites. We are confident of addressing the observations to the US FDA’s satisfaction," said Nilesh Gupta, Managing Director at Lupin. 

In a separate regulatory filing, Lupin said Monday that it has successfully concluded the third edition of its series of medical symposiums for the Indian urology community.

Analysts at JP Morgan expect the Lupin stock to be volatile in CY20, with USFDA inspection-related news flow for its four facilities that are under Official Action Indicated (OAI)/Warning Letters (WL).

“Lupin’s US business has bottomed, with the launch of Levothyroxine likely to support ramp-up over the next few quarters. Thereafter, the US will be supported by gProAir approval (likely in FY21). However, margin improvement from both these launches and its cost optimization efforts are factored in to our FY21-22 estimates and current valuations. Post-Japan divestment, leverage should improve significantly, in our view, but focus should increase on capital allocation, particularly for M&A,” the foreign brokerage firm said in a company update with ‘neutral’ rating on the stock.