This story first appeared in DNA Money edition on Friday, May 24, 2013.
An ‘import alert’ by the US Food and Drug Administration (FDA) on one of its plants is likely to cause a sales loss of $100 million or over Rs 550 crore, Wockhardt said.
The FDA has expressed concern on the drugmaker’s export-oriented facility in Aurangabad.
The Wockhardt management, however, said it should be able to restore most of that ($100 million impact on revenues) within six to nine months by shifting production elsewhere. “That is a worst-case scenario,” said Habil Khorakiwala, chairman.
Shares of Wockhardt fell 20% on Thursday to their lowest level in more than seven months, post the import alert published by USFDA for the Aurangabad unit.
Interestingly, the company’s shares had corrected sharply by over 20% earlier in April when FDA had sought clarifications on the company’s injectables facility in Aurangabad as it was not satisfied with the processes/systems there.
Calling it a routine matter, the company spokesperson has then said that there was nothing more to disclose.
Analysts familiar with the development had said that the company was issued FDA 483 letter for the Aurangabad unit which would be followed by a warning letter, if FDA is not satisfied with the response.
“However, it’s not something to be worried about as the said unit doesn’t contribute more than 3-4% of Wockhardt’s US revenues,” Bhavika Thakker, research analyst, IIFL had said.
Typically, in an FDA 483 letter scenario, once observations are given by the USFDA, the company is given one month time to rectify and submit their response.
Analysts had also said, in case the facility receives a warning letter, it would only affect new approvals in injectibles and not affect current revenue stream materially. The Aurangabad unit currently does not materially contribute to the company’s revenues as it does not include Toprol XL, Flonase or any high value product.