Billionaire Patel's Cadila Falls Most on Record on FDA Warning

  • Warning letter for two plants in Gujarat state: filing
  • No products sold in the U.S. use drugs from Ahmedabad plant

Shares of Cadila Healthcare Ltd., an Indian drug maker controlled by billionaire Pankaj Patel, had its steepest drop on record after receiving a warning letter from the U.S. Food and Drug Administration for two of its plants in the Gujarat state.

The letter pertains to the company’s Moraiya formulation facility and Ahmedabad plant, according to an exchange filing Thursday. No products, which use active pharmaceutical ingredients, or API, from the Ahmedabad plant, are available in the U.S. market.

Cadila’s shares plunged 15 percent to 326.1 rupees at 2:06 p.m. in Mumbai, the worst performance in the MSCI Emerging Markets Index. The FDA’s scrutiny of other Indian drugmakers, including Sun Pharmaceutical Industries Ltd. and Dr. Reddy’s Laboratories Ltd., fueled a selloff in their shares last month. Sun slid 18 percent in November and Dr. Reddy’s tumbled 27 percent.

“The future pipeline and growth from the U.S. would be impacted because of the warning letter,” Surya Patra, an analyst at PhillipCapital India Pvt. in Mumbai, said by phone. “We will review our neutral rating on the stock and the price target after the conference call with the company." Patra has a target of 384 rupees for Cadila

“The company is working hard to ensure that the commitments made to U.S. FDA are fully completed,” the filing said. Cadila, based in the western Indian city of Ahmedabad, will take steps so that the FDA is satisfied with its remediation of the two facilities, it said.

Cadila’s Chairman Patel has a networth of $4.5 billion, according to the Bloomberg Billionaires Index.

(Updates with analyst voice in fourth paragraph.)

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