Dr. Reddy's Laboratories tanks 5 per cent on USFDA observations

The stock of pharma major Dr. Reddy's Laboratories was under pressure in early morning trade on Wednesday as it reacted to the news of USFDA observations issued for its Duvvada unit on Tuesday.

The US Food and Drug Administration (USFDA) completed the audit of the company's manufacturing facility in Visakhapatnam, Duvvada. USFDA had started the inspection of the site for good manufacturing practices on October 22. The US drug regulator issued the Form 483 with eight observations, informed the company in a filing to the exchanges. The company stated that it is addressing the drug regulators concerns.

The results of the inspection of Dr. Reddy's Duvvada units which manufactures cytotoxic and hormonal injectables will have little impact on the company's financials. But a USFDA clearance of the unit would enable the company manufacture complex injectable drugs that have better margins for the US market.

On Wednesday, the stock was reacting to negative investor sentiments and at 9:45 hours, the stock of Dr. Reddy was quoting Rs. 2,452.00 per share, down Rs. 145.70 or 5.61 per cent on BSE.