Pharma Stocks Come Crashing Down As US FDA Worries Mount

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Shares in pharma companies came crashing down, as worries over US FDA concerns mounted across pharma manufacturing facilities in the country.

Pharma Stocks Come Crashing Down As US FDA Worries Mount
On Monday Natco Pharma plunged as much as 11 per cent, after the company said that it has received 483 observation from the US FDA.

Similar, observations at various plants of Dr Reddy's, Sun Pharma, Lupin, Cadilla Health, Wockhardt, Cipla and IPCA Labs etc., have been received in the past.

The Nifty pharma index was down as much as 4 per cent, though the Nifty itself was trading higher. Lupin was down 11 per cent, Aurobindo Pharma fell 4 per cent and Cipla, Glenmark Pharma and Sun were down 3 per cent each.

For most of the generic pharma companies, around 60 per cent of the revenues come from the US.

The US FDA worries, hence pose a serious threat to business prospects. While many companies have received form 483, others have received warning letters from the US FDA.

Many analysts have gone ahead and downgraded pharma stocks on worries over companies hitting the US FDA wall and hence an impact on earnings.

Stocks like Lupin have been the hardest hit, with the stock falling from levels of Rs 2200 to the current level of Rs 1330.

Other stocks like Sun and Glenmark too have seen considerable price damage. Analysts say that should the US FDA problems remain, we might see further reaction in these stocks. Pharma stocks have a higher valuation compared to most other sectors, including the banking, IT or the traditional brick and mortar companies.

Read more about: sun, us fda, lupin
Story first published: Tuesday, March 29, 2016, 10:32 [IST]
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