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Dr. Reddy’s Stock Jumps After U.S. FDA Clears Andhra Pradesh Plant

Dr. Reddy’s  got an EIR from the U.S. FDA for its API manufacturing plant at Srikakulam, Andhra Pradesh.

Capsules fall into a collection bin at a drug manufacturing plant in Goa (Photographer: Dhiraj Singh/Bloomberg)
Capsules fall into a collection bin at a drug manufacturing plant in Goa (Photographer: Dhiraj Singh/Bloomberg)

Shares of Dr. Reddy’s Laboratories Ltd. jumped to the highest in more than four years after the drugmaker said it received the U.S. regulator’s report that paves the way for fresh approvals for its products and exports to its biggest market.

The Hyderabad-based company received an establishment inspection report from the U.S. Food and Drug Administration for the active pharmaceutical ingredient manufacturing plant at Srikakulam, Andhra Pradesh, indicating closure of the audit, according to an exchange filing. The regulator classified the inspection as “voluntary action indicated”—a status given to facilities that are considered compliant with current good manufacturing practices.

The site was issued a warning letter in November 2015, after the inspection in 2014, and was classified as “official action indicated” till now, the filing said. With this, all facilities under the warning letter are now determined as voluntary action indicated. The company does not give a breakup of its plant-wise revenue.

According to Macquarie, the resolution of the API plant at Srikakulam is a key catalyst for the stock. Nomura said Copaxone—a multiple sclerosis drug—is the near-term opportunity filed from this site.

Dr. Reddy’s stock gained as much as 7.68 percent to Rs 4,132 apiece—the highest since Nov. 6, 2015. But it soon pared the opening gains to trade 3.9 percent higher at Rs 3,987. The benchmark Nifty 50 Index is trading 1.35 percent higher at 9,323.