Lupin shares pull back as co clarifies on US FDA action at Mandideep

MUMBAI: Shares of drug maker Lupin clawed their back on Wednesday, gaining 5 per cent to close at Rs 1474.50 on the Bombay Stock Exchange, after the company clarified the status of US FDA inspections at its manufacturing site in Mandideep, Madhya Pradesh.

Lupin’s clarifications — the second in two days — countered issues raised by brokerage firm IIFL Capital, which had termed the observations by the US drug regulator as "very serious".

IIFL in its note to clients on March 29 pointed to the use of rejected batches of intermediates for manufacture of sterile APIs and that the finished products were distributed for four years from 2012 to 2015. Lupin shares had reacted sharply on Tuesday, plunging by 13 per cent.

Lupin, in its defence, said the issue related to one sterile product which contributed to a small portion of its sales, adding that the observation related to an unknown impurity which did not impact the end product. The company said it is in the process of recalling the batches related to the product.

In another observation, IIFL pointed out that the FDA had raised the issue on the use of equipment that was not of appropriate design like the capsule checkweigher. Lupin clarified that the machine was qualified for one capsule size and that it was able to qualify the other size on the spot and demonstrated the results to the inspector on the site.

Sector analysts downplayed the issues raised in the US FDA. A Citigroup report said the stock reaction to the observations appeared overdone. The note said there are no pending ANDAs from this (Mandideep) plant and nor does it support ANDAs at other plants, as per management.