Lupin Shares Jump As U.S. FDA Paves Way For Fresh Approvals From Goa
Shares of Lupin Ltd. jumped the most in more than seven months as the U.S. drug regulator did not recommend any action after an inspection at the company's Goa plant, paving the way for fresh approvals from one of its largest market.
Lupin has received the establishment inspection report from the U.S. Food and Drug Administration for its Goa manufacturing facility, the largest exporting facility to the U.S., it said in an exchange filing. "The U.S. FDA has determined that the inspection classification of the facility is voluntary action indicated."
VAI refers to objectionable conditions or practices being found and documented but the agency is not prepared to take or recommend regulatory action. It also means that the FDA is satisfied with the company's responses to the observations identified. This is different from 'official action initiated' status where the regulator recommends specific regulatory or administrative actions to deal with lapses.
The facility will now operate as a normal plant and it will be possible to obtain fresh approvals for new products from U.S., Vishal Manchanda, pharma analyst at Nirmal Bang, told BloombergQuint. "The warning letter that was issued earlier is lifted."
The warning letter makes it tough to get fresh approvals. The U.S. market contributed 36% to Lupin's revenue in the quarter ended September.
Lupin had received seven observations, including quality control and procedural lapses at the facility, from the U.S. FDA after the completion of the inspection on Sept. 18. The unit, along with four other facilities, was under a warning letter.
Vinita Gupta, chief operating officer at Lupin, in the filing said the FDA's decision is a significant milestone as "we build back our reputation of being best-in-class in quality and compliance".
According to Nilesh Gupta, managing director, the Goa site has a very important place in the U.S. market with the number of affordable, quality medicines it supplies. "We now look forward to new products flowing out of the site again."
The company declined to comment on BloombergQuint's emailed queries.
Shares of Lupin jumped as much as 10% in early trade on Tuesday, the most since May 5. The stock, however, pared some of the gains to trade 6.4% higher around noon. It closed 7.01% higher.
Of the 42 analysts tracking the company, 21 maintain a 'buy', 11 recommend a 'hold' and 10 suggest a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 5.1%.