Dr. Reddys, Sun Pharma, Glenmark bleed indices
All stocks of Nifty Pharma were in the red with Dr. Reddy's Labs and Glenmark Pharma down between 8 to 5 per cent in the morning session on Friday. Dr. Reddy's and Sun Pharma were also the top losers on benchmark indices Nifty and Sensex.
The fall in Dr. Reddy's Laboratories is triggered by concerns around the USFDA observations for its formulations Plant - 3 at Bachupally, Hyderabad. The plant was recently inspected by the US drug regulator between January 30 and February 3, following which 11 observations were notified in Form 483. The unit is an important facility for Dr. Reddy's US market sales.
The key concern is that the four observations issued by USFDA were repeat observations, which questions the companies efforts towards resolving the problems raised by the drug regulator. The observations also call for infrastructural remedies, citing a need for changes in the lab which is expected to take time and needs re-inspection by USFDA. USFDA has also commented on personnel training and missing details in written records. All these are expected to delay the facility's clearance for manufacturing products for the US market.
On the other hand, Glenmark in its earnings conference call cited that the company would face pricing pressure in the US market, especially for its asthma generic drug Advair. The company is also planning to spin-off its innovative business to unlock shareholder value.
The stock of Sun Pharma was being punished despite stellar result. However, the company has been in news for corporate governance issues.
Reacting to these developments, at 11:37 hours, the Nifty Pharma index was at 8,558.65, down 362.25 points or 4.06 per cent dragged mainly by Dr. Reddy's Lab at Rs. 2,464.80, down by Rs. 202.45 or 7.59 per cent, while Glenmark was at Rs. 572.40, down by Rs. 36.80 or 6.04 per cent. Other pharma stocks including Sun Pharma and Divis Labs were down 4 per cent, while rest of the index components PEL, Biocon, Aurobindo, Lupin, Cadila, Cipla were down between 3 to 2 per cent, on Friday.
The benchmark indices were also trailing with Nifty50 at 10,656.55, down 89.50 points or 0.83 per cent, while BSE Sensex was at 35,645.56, down 230.66 points or 0.64 per cent.