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Sun Pharma drops 3% as USFDA initiates action against Halol facility

USFDA inspected the facility from December 3 to December 13 and had issued eight observations, the company had earlier said in a regulatory filing in December.

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Last Updated: Mar 30, 2020, 10.45 AM IST
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Sun Pharma continues to manufacture and distribute existing products for the US market, thereby not likely to have any adverse impact on current business from the facility, the drug major said.
NEW DELHI: Shares of Sun Pharmaceutical Industries fell 3 per cent in Monday's trade after the US health regulator classified Halol facility in Gujarat as Official Action Indicated (OAI). Analysts do not expect much impact on the stock though.

The stock fell 3.15 per cent to hit a low of Rs 327.50 on BSE.

"The sensitivity of Halol to earnings is currently low compared to that in December 2015 when Halol had received a warning letter. Market expectations of upside from generic launches are limited," said Nomura India.

The brokerage said that since the clearance of the Halol warning letter in June 2018, Sun Pharma ex-Taro has received 37 approvals, of which only 8 are from Halol (21 per cent). Besides, there are only 19 ANDAs and 2 NDAs pending approval from the site.

"As per the company, Halol contributes 3-4 per cent of consolidated and 9-12 per cent of the US revenues currently. The company doesn’t expect supply of existing products to be impacted from Halol. Scaling up of specialty sales is the key earnings driver, in our view," Nomura said.

USFDA inspected the facility from December 3 to December 13 and had issued eight observations, the company had earlier said in a regulatory filing in December.

"The company has received a communication from the USFDA indicating that the Halol facility has been classified as OAI," Sun Pharma said in a BSE filing.

The OAI classification implies inter-alia that the USFDA may withhold approval of any pending product applications or supplements filed from this facility till the outstanding observations are resolved.

Sun Pharma continues to manufacture and distribute existing products for the US market, thereby not likely to have any adverse impact on current business from the facility, the drug major said.

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