Angel Broking maintained its BUY rating on Sun Pharmaceutical Industries with a price target of Rs 847, even as the pharma major received 11 observations the US Food and Drug Administration (FDA) for its Dadra unit, saying that these observations will not lead to any negative impact on the earnings of the company.
“While currently these are only observations and will not lead to any negative impact on the earnings of the company,” Sarabjit Kour Nangra, VP Research – Pharma, Angel Broking, said in a note. “Though if not rectified could let to significant impact on US numbers,” she added.
Sun Pharmaceutical Industries has received 11 observations from the US health regulator for its Dadra unit. While inspecting the plant, the US Food & Drug Administration found incomplete lab records at the Pharmaceutical major’s Dadra plant.
These observations include failure to produce appropriate master or control record for each batch of drugs and failure to properly investigate batches that don’t meet specifications. Inspection of the plant by US FDA was concluded in the first week of this month.
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Dadra site is the biggest unit of the company after Halol plant, for supplying drug in the United States. In FY2016, Halol contributed about 7-9% of total sales and more than 15% of US sales for the company, Angel Broking said.
Apart from these two facilities, the company has only one facility in Gujarat in India, which is for active pharmaceutical ingredient (API) and formulation both.
Also, recently the company Mohali facility came out of the US import alert. Mohali, which had been under import alert since September 2013, is an oral solids plant and in terms of capacity is understood to be as big as Ranbaxy’s Ohm Labs facility in the US.
Today, Sun Pharmaceutical Industries share prices fell 2.66% to Rs 640.05 on the NSE.