Lupin Slumps After U.S. Drug Regulator Issues Warning Letter To Two Plants
An employee inspects tablets as they move along the production line at the Lupin Ltd. pharmaceutical plant (Photographer: Dhiraj Singh/Bloomberg)

Lupin Slumps After U.S. Drug Regulator Issues Warning Letter To Two Plants

Shares of Lupin Ltd. dropped the most in more than six-and-a-half years after the drugmaker said the U.S. regulator issued a combined warning letter for its Goa and Indore-Unit II plants, a move that may delay future drug approvals.

A warning letter is issued by the U.S. Food and Drug Administration if it finds a manufacturer or any other organisation has violated a regulated activity.

Lupin Slumps After U.S. Drug Regulator Issues Warning Letter To Two Plants

Lupin earlier received three Form-483 observations for Goa plant on April 7 and six for its Indore unit on May 18 after inspections. The company said it had responded to all observations and was “deeply disappointed at the FDA outcome”.

Shares of Lupin dropped as much as 17.9 percent to their lowest since November 26, 2013 after it informed the exchanges. While the company does not expect disruption of existing product supplies, it said a delay is likely in new product approvals from the two facilities.

Both the plants together contribute more than half of the drugmaker's U.S. sales and approximately 20 percent of its total sales, Surajit Pal, pharma analyst, Prabhudas Lilladher, said.

Don’t see an immediate impact on earnings as existing products can be sold. Issue will be with pipeline that will now get affected.
Surajit Pal, Pharma Analyst, Prabhudas Lilladher

Amey Chalke, a pharma Analyst at HDFC Securities, expects a significant cut in earnings estimate for Lupin. “The warning letter will mean future approvals will be halted. It will be difficult for Lupin to offset the slowdown in Glumetza and Fortamet with this move,” he told BloombergQuint over the phone.

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