Sun Pharma shares drop 2% on USFDA warning letter

Shares of Sun Pharmaceutical Industries fell nearly 2% in early trade on Thursday as sentiment was dented after the pharma major received a warning letter from the U.S. drug regulator for its Dadra facility. The United States Food and Drug Administration (USFDA) has issued a letter for violations of Current Good Manufacturing Practice (cGMP) regulations at the Dadra facility, it says in an exchange filing.

“The company has received a warning letter from USFDA for its Dadra facility. The warning letter summarises violations with respect to Current Good Manufacturing Practice (cGMP) regulations. The contents of the warning letter shall be made public by the USFDA in due course,” Sun Pharma says in an exchange filing last night.

Weighed down by the development, Sun Pharma shares opened lower for the second straight session at ₹1,489.95 against the previous closing price of ₹1,504.15 on the BSE. In the early trade, the pharma stock declined as much as 1.9% to ₹1,475.55, while the market capitalisation slipped to ₹3.54 lakh crore.

The share price of Sun Pharma touched its 52-week high of ₹1,638.70 on April 5, 2024, and a 52-week low of ₹977.50 on June 23, 2023. In the last one year, the counter has risen 49%, while it surged 20% in six months. In the last one month, the stock has corrected over 4%, whereas it fell nearly 2% in a week.

The U.S. FDA had conducted an inspection at the company's Dadra facility from December 4, 2023 to December 15, 2023.  Following an inspection, the regulator had given the inspection classification status of this facility as Official Action Indicated (OAI), which means regulatory and/or administrative actions are recommended.

Sun Pharma in its March quarter earnings report says that it has a “comprehensive” product offering in the U.S market consisting of 531 approved abbreviated new drug applications (ANDAs) while filings for 104 ANDAs await U.S. FDA approval, including 29 tentative approvals. Additionally, the portfolio includes 51 approved new drug applications NDAs while 14 NDAs await U.S. FDA approval. During January-March quarter of FY24, 11 ANDA were filed and 2 approvals were received.

In the financial year 2023-24, the company invested ₹3,177 crore on research and development (R&D) compared to ₹2,368 crore in the previous fiscal. “Our R&D efforts span across both specialty and generic businesses and we continue to invest in strengthening the product pipeline for various markets. Our specialty R&D pipeline comprises 6 molecules undergoing clinical studies,” it said in its earnings report.

For the full FY24, Sun Pharmaceutical posted a consolidated net profit of ₹9,576.38 crore, up 13% from ₹8,473.58 crore in the previous fiscal. Revenue from operations grew 10.5% to ₹48,496.85 crore from ₹43,885.68 crore at the end of FY23. For the fiscal, India formulation sales stood at ₹14,889.3 crore, up 9.5% YoY. The United States sales grew 10.1% to $1,854 million, while sales in the rest of the world climbed by 7.8% to $811 million. Emerging markets formulation sales was at $1,041 million, registering a 5.9% growth. 

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