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Divis's Labs stock hits a 52-week low following USFDA import alert on key unit

E Kumar Sharma     March 21, 2017

Shares of Divi's Laboratories hit a 52-week low of Rs 635 on Tuesday after the company informed BSE that USFDA had issued them an import alert on 20th March, for the products manufactured at their unit at Visakhapatnam, Andhra Pradesh. The stock had opened at Rs 711.65 and tanked about 18 per cent to a 52-week low of Rs 635.

Some of the analysts, who have been tracking this development, said, it was a major hit for the company as this is a large plant and one that contributes significantly to the generic API business of the company; however, they also added that it wasn't an unexpected development as the US regulator had recently made some observations on the unit to the  company.

 "The Unit II contributes to about 70 per cent of the revenue from generic APIs and 75 per cent by volume and is therefore significant," said Surajit Pal, analyst at Prabhudas Lilladher.

The note from the company also informed that the agency has exempted the following products from the import alert: Levetiracetam, Gabapentin, Lamotrigine, Capecitabine, Naproxen sodium, Altegravir potassium, Atovaquone, Chloropurine, BOC core succinate, 2,4-wing active ester. It said that Divi's Laboratories, along with third party consultants, is currently working to address the concerns of the USFDA and is making all efforts to fully meet the compliance requirements.

According to analysts some of these products are significant product but much depends on how customers respond to it in the light of the fact that the others have been pulled up by the US regulator.   

Shares of Divis's Labs were trading 18 per cent lower at Rs 642.92 as of 12:41 on the BSE.


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