Wockhardt’s Main Drug Factory Faces FDA Bans After Lapses
November 30, 2013 Leave a comment
Wockhardt’s Main Drug Factory Faces FDA Bans After Lapses
Nov. 27 (Bloomberg) — Wockhardt Ltd. was banned from selling some medicines to the U.S. from its most lucrative factory in India after U.S. regulators added it to a list of restricted facilities. Its stock slumped as much as 14 percent. The Mumbai-based company’s Chikalthana plant in Aurangabad, was added to the Food and Drug Administration’s “red list,” which means its products may be detained without physical examination, the FDA said in a statement yesterday.The Chikalthana factory, 200 miles east of Mumbai, generated $230 million in sales to the U.S. — or about a quarter of Wockhardt’s revenue — in the year ended March 2013. The plant makes copies of Toprol-XL, a popular heart pill, that accounts for about 14 percent of sales. Generic Toprol-XL wasn’t among five products excluded from the FDA’s ban.
“There’s going to be a big impact from this,” said Prakash Agarwal, an equities analyst at CIMB Securities India Pvt. in Mumbai, in a telephone interview. “There could be a 25 to 30 percent shave-off on earnings per share.”
Wockhardt fell as low as 406 rupees in Mumbai trading, the worst intra-day slide in four months, and declined 8.7 percent to 429.05 rupees as of 11:02 a.m.
A spokesman for Wockhardt in Mumbai wasn’t immediately able to comment on the FDA alert.
The import alert prevents Wockhardt from generating revenue in the U.S. from important products, such as Toprol-XL copies, said Agarwal, who is reassessing his rating on the stock.
“FDA resolution costs will increase and new product approvals will be very much delayed,” he said. “Product transfers to other plants will take a very long time.”
When FDA inspectors visited the plant in July, they found inconsistencies in drug-test results, urine spilling over open drains, soiled uniforms and mold growing in a raw-material storage area. The findings, reported by Bloomberg News two months ago, were detailed in an official document obtained by Bloomberg via a Freedom of Information Act request.
To contact the reporters on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Ameya Karve in Mumbai at akarve@bloomberg.net
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