This story first appeared in DNA Money edition on Saturday, Apr 13, 2013.
Wockhardt is understood to be facing issues with the United States Food and Drug Administration (USFDA), which has sought clarifications on its injectables facility in Aurangabad.
A USFDA team inspected the facility last month.
Wockhardt officials did not share details on the clarifications sought, whether Wockhardt has provided the necessary information to the USFDA and the stage the matter is in now.
“It is a routine matter and there is nothing more to disclose on this as yet,” said a company spokesperson.
But the company’s stock has corrected more than 20% in the last 3-4 days. Market sources attributed the decline to concerns expressed by USFDA on the unit.
According to Bhavika Thakker, research analyst, IIFL, the company has been issued FDA 483 letter, which is generally followed by a warning letter if the agency is not satisfied with the responses.
“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,” said Thakker.
To be sure, the Aurangabad unit does not manufacture Toprol XL, Flonase or any other high value product.
Whether a warning letter has been issued to Wockhardt as well is not yet known. But even if it were, it would only affect new approvals in injectables and not the current revenue stream, according to analysts.
“We estimate less than 5% impact to earnings, should this facility get a warning letter, assuming no new launch takes place from the same,” said an analyst. “We believe the sell-off is overdone, especially noting there is still no visibility of an adverse USFDA action as well as limited impact from the unit in consideration.”
Going by the analyst, the management believes the issues can be resolved and there would be clarity post the USFDA’s revert on their responses, expected in 3-4 weeks
Follow Ashish K Tiwari on twitter @ashishktiwari
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