- FDA withholds future approvals for products from Halol
- Sun to seek FDA re-inspection after remediation measures
Shares of Sun Pharmaceutical Industries Ltd. dropped the most in six weeks after receiving a warning letter from the U.S. Food and Drug Administration following an inspection at one of its facilities.
Sun’s shares slid 4.6 percent to 754.20 rupees in Mumbai, the biggest loss since Nov. 9. HSBC Holdings Plc cut the stock’s rating to hold from buy, while Morgan Stanley reduced it to equal-weight from overweight.
Sun, controlled by billionaire Dilip Shanghvi, got the FDA warning as a result of the inspection in September 2014 at its Halol facility in India’s Gujarat state, the drugmaker said in a statement Saturday. The FDA has withheld future product approvals from this facility. Sun said it expects to seek a re-inspection by the FDA on completing its “remediation commitments.”
“While we wait for further details of the warning letter, the Halol warning skews risk-reward negatively and could extend the timeline for a recovery in the U.S. business,” Girish Bakhru, an analyst at HSBC Securities and Capital Markets (India) Pvt. said in a report on Monday. Halol is Sun’s key facility for the U.S. market, Morgan Stanley said in its report.
Sun, which became the world’s fifth-biggest generic drugmaker with its purchase of Ranbaxy Laboratories Ltd., also faces the challenge of resolving U.S. import bans on four of Ranbaxy’s Indian facilities while maintaining its profitability. Daiichi Sankyo Co. last year agreed to sell its controlling stake in Ranbaxy to Sun.
“We will continue to cooperate with the U.S. FDA and undertake any additional steps necessary to ensure that the U.S. agency is completely satisfied with our remediation of the Halol facility,” Managing Director Shanghvi said in the statement.
Shanghvi’s net worth is $15.9 billion and he is the second-richest Indian, according to the Bloomberg Billionaires Index.