FDA's decision forces Sun Pharma to shed 12 percent

By SiliconIndia   |   Friday, June 26, 2009   |    3 Comments
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Bangalore: Shares of Sun Pharmaceuticals plunged by 12 percent on a relatively good day for the markets when it finished 419 points in the green. The decision by U.S. Food and Drug Administration (FDA) to seize 33 drugs by Caraco Pharmaceutical Laboratories, a subsidiary of Sun Pharma forced the stock to fall by 12.17 percent to end at Rs 1,140.45. After starting the day at Rs 1,199, the shares dropped to an intra-day low of Rs 1,070 after 580,489 shares were traded. The one year stock chart is on the left. The FDA had seized the drugs from the company's Michigan facilities in Detroit, Farmington Hills, and Wixom. The drugs were found to be contaminated, even after the company had conducted an internal investigation to determine the cause and taken corrective measures. This is not the first time the company has come under the regulator's scanner. Last October, the FDA had conducted inspection of its facilities and found "significant deviations from Current Good Manufacturing Practice (CGMP) regulations." Sun Pharma is the second Indian company this year to have faced FDA's wrath. In February, the U.S. drug watchdog had taken regulatory action against Ranbaxy's Paonta Sahib facility in Himachal Pradesh on the ground it had falsified test results. Out of the 28 analysts following the stock, the consensus recommendation is outperform with 15 analysts recommending to buy the stock.
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