 "Lupin Pharma")
Even as concerns over Lupin's Goa plant have not vanished, fresh worries on Mandideep plant have further hurt sentiment. The plant in Madhya Pradesh, which produces key revenue-contributing cephalosporin range of products, along with several active pharmaceutical ingredients (APIs), was inspected by the USFDA (US Food and Drug Administration) between February 8 and 19. After that, the US body issued three observations.
Analysts say these are due to violation in manufacturing process and data-keeping. Since these two plants account for a majority of Lupin's sales to the US (which is 40 per cent of total revenues) and with analysts saying observations are serious and remediation may take up to 18 months, it is not surprising the Street is worried.
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Lupin said the USFDA issues had been addressed and were insignificant in nature. It added that the outcome of the audit would be voluntary action and there would be no remediation required.
The clarification provided some relief. Lupin's stock, which had fallen 14.5 per cent intraday on Tuesday to hit a new 52-week low of Rs 1,294, closed at Rs 1,402, a net decline of 6.3 per cent.
Sentiment is likely to remain soft till clarity on the Goa plant emerges, say analysts. Lupin has recently received approval for launch of generics of oral contraceptive Femcon Fe, to be produced from the Indore unit. Analysts at Nomura say that against the backdrop of recent USFDA observations on Goa unit, an approval for its unit will be key to ease the concerns. Amar Ambani, head of research at IIFL, says the regulatory overhang on Goa site would prevent any significant re-rating.
After inspection of the Goa unit in July 2015, the company continued getting approvals for products filed from the unit and the Street remained undisturbed by observations till the plant was re-inspected and issued fresh observations.
