Ipca Shares Slip 4 Per Cent On FDA Warning Letter

Shares of Mumbai-based drugmaker Ipca Laboratories slipped almost 4 per cent in the morning trade on Monday (February 1) on BSE after the company said it has received a warning letters from the US Food and Drug Administration on compliance issues with three of its export facilities located at Ratlam and Pithampur in Madhya Pradesh and Piparia in Silvassa.

The company, which had already suspended exports of products, mainly active pharma ingredients (APIs) and drug formulations last following negative observations in inspections conducted by the US drug regulator at these factories and a subsequent import alert on certain products.

In a notice to stock exchanges on Monday, Ipca Lab said that the US FDA has now issued a warning letter to these manufacturing units.

"We have already informed you (the stock exchanges where its shares are listed) that the company has voluntarily suspended shipments of its APls and formulations for the US market till US FDA inspection observations are resolved. Therefore, since July 2014 the company has not shipped any APls or formulations to US market except the products which are exempted from import alert," Ipca said in its notice.

Ipca said it has responded to the US FDA inspection observations with its remediation measures and has been since working also with external consultants to ensure that its remedial activities are undertaken in a proper and timely manner.

"Since the inspection, the company has regularly communicated with US FDA with periodic updates on remedial measures undertaken and it is fully committed in resolving this issue at the earliest," it added.

Ipca shares have been on a slide since the FDA alert on its manufacturing plants. It sales revenue also have been affected significantly due to the suspension shipments to the US, the largest contributor to its overall revenue.

The US, the largest pharmaceutical market in the world in terms of value, has been the key target of most of India's large and medium pharmaceuticals companies as the market provides high margin.

But due to negligence on the part of these companies to fully comply with the changing good manufacturing practices or current GMP norms, many of them faced such regulatory actions by the FDA leading to severe revenue crisis.

For instance, Ipca Labs posted 80.92 per cent plunge in net profit to Rs 11.69 crore for the September quarter in 2015-16, as against a profit of Rs 61.30 crore for the corresponding period a year ago.