Strides Arcolab scrip falls 12 per cent after getting a '483' letter from USFDA

MUMBAI: The shares of Bangalore-based Strides Arcolab fell 12 per cent after the company received the dreaded '483' communication from the US Food and Drug Administration or FDA, for one of its injectible units made under its specialities subsidiary - Agila.

A 483 letter communicates the concerns of the FDA based on observations during inspection of the plant.

A company has 15 days time to respond to a '483' letter and resolve contentious issues.

Strides Arcolab confirmed the development. " Yes we have received a 483, for one of the units of Agila in the month of June," said Arun Kumar, MD Strides Arcolab over telephone. He, however, did not elaborate the reason for receiving the 483.

If a company fails to resolve the issues mentioned in 483, then the FDA proceeds to send a warning letter to the company, halting the exports of the products. The 483 letter comes at a time when Strides is in the process of completing its deal with US drug maker Mylan. In March this year, the company sold the Agila business to Mylan for Rs 9,950 crore, the company is awaiting an approval from the Foreign Investment Promotion Board (FIPB) which revoked a clearance it gave earlier.

"This is not a good development; this raises questions about corporate governance in Indian companies and might force foreign institutional investors to exit Indian pharma stocks", said Surjit Pal, an analyst with brokerage firm Prabhudas Lilladher.

However, people with direct knowledge of the Strides issue, say that the company has received a '483' missive because gloves were reused in the sterile injectables area, and the matter might be resolved soon. The latest development coincides with the challenges faced by a few other Indian pharma companies to meet the quality standards of the US drug regulator.