Jubilant drops 10% after FDA warning
Dec 05 2013 , Mumbai
In a filing with BSE on Thursday, the firm said a plant of Jubilant HollisterStier (JHS) at Spokane, Washington, had been issued a warning letter by FDA. Its response will be sent by December 12.
“The response will identify corrective actions already completed as well as some pending actions to ensure current good manufacturing practice compliance. We expect that manufacturing at and distribution and sale of products from this facility will not be impacted as the warning letter will affect new approvals only. JHS-Spokane is committed to implementing the corrective actions required to address the FDA concerns, and will work with FDA to resolve this matter,” the filing said.
The factory accounted for 7 per cent of Jubilant Life Sciences’ consolidated sales and 4 per cent to consolidated earnings before interest, taxes, depreciation and amortisation (Ebitda) in the six months ended September. The company had reported consolidated sales of Rs 2,742 crore in the first half.
Jubilant Life Sciences, which makes generics and provides contract manufacturing, has 10 factories in India, the US and Canada.
The company said, “FDA specified in the letter that until all corrections have been completed and that they have confirmed correction of the violations and firm compliance to the current good manufacturing practices, it may withhold approval of new applications or supplements listing JHS-Spokane as the drug product manufacturer.”
Shares of Jubilant Life Sciences dropped by 9.96 per cent after the announcement, the steepest one-day fall in six months.
According to Surajit Pal of Prabhudas Lilladher, the impact will be 14 per cent because the company’s Canada factory also received a similar warning few months ago. “Around Rs 705 crore on an annualised basis is at stake,” he said. (In February the company had received a similar warning over its Quebec plant.)
Siddhant Khandekar, pharmaceutical analyst at ICICIdirect, said, “This is the second warning letter. The alert will damage the company’s image. The 7 per cent impact is on the overall revenue because the company hardly has any India operations.”