MUMBAI, July 24 Brokers Macquarie downgraded on
Wednesday shares in Indian drug maker Wockhardt Ltd on
concerns that an import ban imposed by the United States over
quality issues would last longer than expected, sending the
stock down 20 percent.
Wockhardt shares have fallen 25.8 percent so far this week,
wiping 25.1 billion rupees ($425 million) from its market value,
after a warning from the U.S. Food and Drug Administration (FDA)
about manufacturing practices at its Waluj plant.
Wockhardt has already been banned from shipping drugs to the
United States and Britain from the factory in western India
after their drug regulators identified deficiencies at the
"We think this will entail additional cost and time to get
the Waluj facility fully FDA complaint," Macquarie said in a
statement. The brokerage almost halved its target price for
Wockhardt's shares and downgraded its rating to neutral from
Citigroup, in its own research note, said it could take
Wockhardt about two years to fully address the FDA's concerns.
The bank retained its buy rating on the company, however, citing
In its warning letter dated July 18, the FDA said it may
withhold approvals for any new launches Wockhardt was planning
for the United States until the company addressed its concerns
about the Waluj plant.
The FDA also recommended Wockhardt hire independent auditors
to review its operations at Waluj, and asked the company to
detail its plan for an upgrade.
The FDA also said Wockhardt had "repeatedly delayed, denied,
limited inspections" or refused to permit FDA inspections.
Wockhardt did not immediately comment about the downgrade.
In a statement to the stock exchange on Saturday, the company
said it had initiated "several corrective actions" to resolve
the concerns raised by the FDA.
Wockhardt has previously said the U.S. ban would cost the
company about $100 million in sales a year.
Shares in Wockhardt were trading down 20 percent at 659.20
rupees at 0947 GMT, their lowest level in more than a year. The
stock has lost more than half its value this year.
Several Indian generic drugmakers like Ranbaxy Laboratories
Ltd, Jubilant Life Sciences Ltd and Sun
Pharmaceuticals Industries Ltd have faced compliance
issues over the past three to four years, mainly after FDA
India exports pharmaceutical products worth about $12
billion every year and is seen as a key source for generic drugs
by regulated markets such as the United States, Europe
(Reporting by Kaustubh Kulkarni and Abhishek Vishnoi; Writing
by Sumeet Chatterjee; Editing by Miral Fahmy)