Sun Pharma Jumps After U.S. Drug Regulator Clears Mohali Facility
The U.S. drug regulator had put the Mohali facility on import list in 2013.
Shares of Sun Pharmaceuticals Ltd. rose after the U.S. drug regulator lifted an import alert issued for its plant in Mohali, Punjab, allowing the company to sell drugs manufactured at the unit in the American market.
The U.S. Food and Drug Administration’s (U.S. FDA) decision will take the Mohali facility off the ‘official action initiated’ list, the company said in a statement to stock exchanges.
Shares rose as much as 6.6 percent to Rs 729 after the announcement. Sun Pharma inherited the Mohali facility as part of its $3.2-billion deal to acquire Ranbaxy Laboratories Ltd. The U.S. regulator had put the facility on its import alert list in 2013.
Analysts’ Take
The U.S. drug regulator’s decision is a sentiment booster for Sun Pharma, said Chaturya Aggarwal, analyst at Indian brokerage IDBI Capital Markets & Securities. It is a long-drawn benefit as a drug application transfer and approval would take at least 24 months, he said.
So there is no direct EPS (earnings-per-share) accretion or revenue generation immediately, but because they (Sun Pharma) are seeing a slow pace of approvals from the Halol facility, they could use this (Mohali) as one of the plants to file drug applications.Chaturya Aggarwal, Analyst, Institutional Equities, IDBI Capital Markets & Securities
Agreed Amey Chalke, analyst at brokerage HDFC Securities, saying that the ramp-up would happen gradually and additional capacity would reduce Sun Pharma’s dependence on the Halol plant.
There are about 20 filings pre-2013 from Mohali but are not lucrative, so it will not change U.S. revenues for the company drastically.Amey Chalke, Analyst, HDFC Securities