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Business News/ Market / Stock-market-news/  Wockhardt shares dive 9.8% on US import ban
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Wockhardt shares dive 9.8% on US import ban

Wockhardt shares ended trading at `915.30 on Monday after having fallen as much as 14% in early trading

In its order on Friday, US FDA cited non-compliance with current good manufacturing practices in slapping the ban on the active pharmaceutical ingredients plantPremium
In its order on Friday, US FDA cited non-compliance with current good manufacturing practices in slapping the ban on the active pharmaceutical ingredients plant

Shares of Wockhardt Ltd plunged almost 10% on Monday after the US Food and Drug Administration (FDA) on the weekend banned imports from the drug maker’s plant in Ankleshwar, Gujarat.

In its order on Friday, the FDA cited non-compliance with current good manufacturing practices (cGMPs) in slapping the ban on the active pharmaceutical ingredients plant.

Wockhardt shares ended trading down 9.88% at 915.30 on Monday after having fallen as much as 14% in early trading. The benchmark Sensex gained 0.37% to 28,182.57 points.

The company said it was making “all efforts to resolve the matter" with the FDA, which inspected the Ankleshwar plant in November and made several observations relating to alleged cGMP violations.

The Ankleshwar plant largely caters to domestic and European markets, with some exports of active pharmaceutical ingredients to Wockhardt’s US plant.

The plant is the third Wockhardt facility to have been banned by the FDA from supplying drugs to the US market. The US contributed about 22% of Wockhardt’s revenue of 4,461.4 crore in the year ended March.

Wockhardt’s Chikhalthana and Waluj plants in Maharashtra have been banned from shipping products to the US since 2013. Both plants are under remediation procedures.

In January, the FDA also issued observations on the company’s Shendra plant in Maharashtra that exports oral solids and injectables to the US.

Wockhardt is serving the US market almost entirely from the manufacturing plant in Chicago it acquired from Morton Grove Pharmaceutical Inc. in 2007.

Analysts said the import alert comes as a setback to the company’s efforts to put its regulatory compliance woes behind and may well delay the turnaround of its US business.

On Monday, Macquarie Capital Securities (India) Pvt. Ltd downgraded its outlook for the Wockhardt stock to neutral from outperform.

“While we remain bullish on the long-term fundamentals of the company, we think the potential risk to near-term earnings exists as Ankleshwar further adds to the uncertainty," Macquarie said.

Macquarie said it had expected Wockhardt to resume exports from the Waluj and Chikalthana plants to the US by late fiscal year 2017 or early fiscal year 2018. “But now it has pushed this date to the late second half of fiscal 2018," it said.

The broker also reduced its price target on the stock by 25% to 1,015.

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Published: 08 Aug 2016, 04:50 PM IST
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