Dr Reddy’s heading for big trouble: Amit Rajan, Celogen Life Sciences

The company will be on a corporate alert with respect to quality and very soon you will see a number of FDA instructions getting into Dr Reddy’s FDA plants which are already supplying to US, Amit Rajan, Director, Celogen Life Sciences, tells ET Now.

Edited excerpts:

Why should there be four repeat observations for a company like Dr Reddy’s Laboratory (DRL)? It is a bit shocking!

Not shocking with respect to only getting a repeat observation because there are some observations where you generally get repeats and you keep working. But the kind of observations that Dr Reddy’s has got for these plants, I can assure you that Dr Reddy’s is heading for big, big problem, The API plants of Dr Reddy’s have always been fully compliant, except for the oncology one and these kind of observations are not expected from DRL unit.

The stock is nose diving right now, we are seeing 14% or 17% cut, now down about 10%. Would you say this calls for a significant derating in the stock?


I cannot comment on the stock pricing because I am a technical guy but I can only assure you that there are multiple problems ahead of Dr Reddy’s in coming days.

What is the next course of action as far as Dr Reddy’s is concerned? In this particular Bachupally facility, four out of the 11 observations are repeat observations. Given the fact that the company has a few other facilities which are currently under a warning letter as well, going forward how do you think Dr Reddy can resolve these particular issues?

This plant issue they have to resolve by responding to the observation, mandatory in 15 days and there will be a lot of communication to and fro between FDA and Dr Reddy’s and hopefully if FDA agrees, which I do not think FDA would agree because this looks like to be a cultural issue. Repeat observation demonstrates that in six to seven months time you will get a warning letter for this facility and once warning letter comes up, coupled with earlier letters, it means they have messed it up. It is going the Wockhardt way.

The company will be on a corporate alert with respect to quality and very soon you will see a number of FDA instructions getting into Dr Reddy’s FDA plants which are already supplying to US.