IPCA Labs plunges over 11% on USFDA alert

MUMBAI: Shares of IPCA Laboratories plunged over 11 per cent in early trade following reports the company has received US FDA import alert at two manufacturing facilities.

According to USFDA, IPCA Labs’ unit in Pithampura (MP) and Piparia (Silvassa) have failed to meet GMP.

This is the third import alert for the company. In January, it had received import alert for its Ratlam plant. It is the only USFDA approved API plant and there were concerns that US revenues would get impacted.

“Earlier, the company was issued Import alert for its Ratlam API facility, which led the management to voluntarily stop supplying drugs to US market from all of its facilities,” said Sharekhan report.

“The latest development is set to impact the company’s prospects for longer period. As the remedial measures will require a significant amount of costs and time there would be severe impact on company’s operating performance. Currently we have Hold rating on the stock,” the report added.

Meanwhile, Nirmal Bang is of the view the alerts are sentimentally negative for the company though no immediate financial impact is expected.

Due to acute shortages in some of the key molecules of IPCA, USFDA had excluded four products Trimethoprim, Ondansetron, Hydroxychloroquine Sulfate and Propranolol Hydrochloride from the import ban at its Ratlam plant. These products contribute nearly ~85 per cent of US sales for the company.