Glenmark Pharma drops 5% on U.S. FDA warning for Goa facility

Shares of Glenmark Pharmaceuticals dropped 5% in intraday trade on Monday amid a report that the company has received a warning letter from the U.S. drug regulator for its Goa manufacturing facility. The U.S. Food and Drug Administration (USFDA) has raised concerns regarding the company’s failure to establish required laboratory control mechanisms at its Goa plant, which produces drug formulations. The regulator inspected the Bardez-based manufacturing facility from May 12, 2022, to May 20, 2022.

In a letter directed to Glenmark Pharmaceuticals chairman and managing director Glenn Saldanha, the U.S. FDA pulled up the company for significant violations of Current Good Manufacturing Practice (CGMP) regulations for finished pharmaceuticals. "Because your methods, facilities, or controls for manufacturing, processing, packing, or holding do not conform to CGMP, your drug products are adulterated," the drug regulator said in the letter.

The US FDA pointed out that the company failed to establish and follow required laboratory control mechanisms. "Your firm failed to have appropriate procedures for the integration of chromatographic peaks and for the review of chromatographic data processing. Our investigators identified an example of your firm manually entering timed integration events into the processing methods and reporting passing results without adequate procedural controls or justification," it said.

Weighed down by the development, Glenmark Pharmaceuticals shares opened 2.2% lower at ₹427, against the previous closing price of ₹436.70 on the BSE. Extending opening losses, the pharma stock fell as much as 4.9% to hit an intraday low of ₹415.25, while its market capitalisation slipped to ₹11,973.8 crore. In comparison, the BSE Sensex was trading marginally lower at 62,171 points at the time of reporting.

Glenmark Pharma shares currently trade 23% lower than its 52-week high of ₹542.65 touched on December 13, 2021, while it touched a 52-week low of ₹348.90 on June 20, 2022. On the year-to-date (YTD) basis, the stock has fallen 19%, while it has given a positive return of 13% in the past six months. In the last one month, it has dropped 1.5%, whereas it has shed over 1% in a week.

Last month, Glenmark Pharmaceuticals had confirmed that the U.S. FDA had issued a warning letter for its Goa facility. However, the company added that the warning letter would not have any impact on disruption of supplies or the existing revenues from operations of this facility.

“The Company is committed to work along with the US FDA to implement all the necessary corrective actions required to address the concerns at the earliest. The Company is committed to maintaining the highest quality and compliant manufacturing standards at all of its facilities across the globe,” it had said in a filing on November 23.