Dr Reddy's Labs jumps 3% on completion of USFDA audit at Srikakulam plant

NEW DELHI: Shares of Dr Reddy's Laboratories climbed 3 per cent in Monday’s trade after the drugmaker said that that USFDA drug regulator has completed the audit of its API plant at Srikakulam in Andhra Pradesh with no obeservations.

In a brief BSE filing, the company said, “This is to inform you that the audit of our API Srikakulam Plant (SEZ), Andhra Pradesh by the US FDA, has been completed today with no observations.”

The Srikakulam API plant had received two observations under Form 483 in the last re-audit by the USFDA on April 4, 2017. The plant finally cleared the inspection on its fourth audit.

Following the development, the stock rose 3.04 per cent to hit a high of Rs 2,721.95 on BSE. Some brokerages are cautious on the stock.

“Near-term outlook has worsened as: commercial potential of niche organic pipeline products like Aloxi 505b2 and gGleevec has eroded completely; acquired pipeline’s potential is at risk due to adverse developments; and FDA risk at Duvvuda has escalated post its recent inspection. As per our discussions with other filers, a number of developments need to align for successful monetisation of gCopaxone and gNuvaring. We cut FY18E and FY19E EPS 22% and 17%, respectively. Maintain ‘HOLD’ with a target price of INR2,620 (18x FY19E EPS),” Edelweiss Secutrities said in a note.