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Research
Views on Updates of Warning Letter - USFDA: Angel Broking
Posted On : 2015-12-31 01:06:29( TIMEZONE : IST )
Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking)
Cadila Healthcare-Updates on Warning Letter-USFDA:
Cadila has received a Warning Letter issued by the USFDA relating to its Moraiya formulation facility and Ahmedabad API facility (Zyfine). While the company has mentioned that it's working hard to ensure that the commitments made to the USFDA are fully completed. The Company also will continue to take all necessary steps to ensure that the USFDA is fully satisfied with its remediation of the above facilities.
During the 2QFY2016, the company had mentioned that, it has initiated site transfer of key filings namely Asacol HD, Toprol XL and Prevacid OTD and expects it to be done over the next 6-9 months. Cadila has already gained site transfer approvals for 4 of its existing products. Also, its new SEZ formulations facility (oral Oncology, oral solids) received the Establishment Inspection Report (EIR) from the USFDA. The company has undertaken 40+ filings over the past 3-4 years from this facility paving the way for monetizing its large ANDA pipeline. Additionally the company is also hopeful of commissioning its new sterile injectable facility located in Baroda by July 2016.
While it's too early to ascertain the impact on the numbers, as we also await more clarity on the same. Also, the company has mentioned, that it will respond to USFDA to address the observations within the statutory time permitted in the letter. Also, it's committed to resolve all the issues and revamp our quality systems and processes and that there are no products in the US market which use API of Zyfine facility. On valuations front, the company is currently trading at 22xFY2017E earnings, thus leaving little for comfort. In our assessment, after the correction, even in the best case scenario, the company has upsides of only 7-8%. We remain NEUTRAL on the stock.
Shares of CADILA HEALTHCARE LTD. was last trading in BSE at Rs.385.15 as compared to the previous close of Rs. 387.05. The total number of shares traded during the day was 74717 in over 1942 trades.
The stock hit an intraday high of Rs. 391 and intraday low of 383.5. The net turnover during the day was Rs. 28866653.
