USFDA action on Indoco Plants: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research- Pharma, Angel Broking):

"The USFDA had inspected Indoco Remedies manufacturing facilities (Plant II & Plant III, L-32,33,34 Verna Industrial Estate Area, Verna, Goa), from August 31st 2016 to September 4th, 2016.As an outcome of this inspection, the facility received 6 observations in Form 483, which do not pertain to data integrity. Based on the review of compliance response, USFDA accepted company's response to 4 observations. However, FDA remains concerned with respect to 2 observations, pertaining to one specific product, for which the company is contract manufacturer, for one of its customers and consequently, the company has received a warning letter from USFDA dated 27th March 2017. The company is fully committed in resolving the issue and will respond at the earliest.

As per the company, warning letter pertains to issue of leakages in the product Latanoprost, which has sales of INR 25cr p.a. Revenue exposure of plant under warning to U.S. is INR 75cr, out of the total U.S. business of INR 110cr. In terms of number of ANDAs pending from Plant III is 9, while number of ANDAs pending from Plant II is 18. While the company does not expect disruptions in supplies as of now, it expects the delay in approvals in future. AS of now the damage is very minimal to the US operations of the company and even in the worst come situation (if all the INR 75cr sales are under pressure), the impact on the net profit is expected to around 6-7%. We maintain our NEUTRAL rating on the stock."

Shares of INDOCO REMEDIES LTD. was last trading in BSE at Rs.228.95 as compared to the previous close of Rs. 249.95. The total number of shares traded during the day was 226701 in over 7647 trades.

The stock hit an intraday high of Rs. 234 and intraday low of 209. The net turnover during the day was Rs. 49993818.

Source : Equity Bulls

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