UPDATE 1-Caraco sees continued impact from regulatory action

* Says laid off 430 employees

* Shares down 2 pct

Oct 27 (Reuters) - Caraco Pharmaceutical Laboratories CPD.A expects continued impact from an agreement it reached with the U.S. health regulator on manufacturing issues, and said it cut more jobs as a result.

The generic drugmaker signed a consent decree with the Food and Drug Administration in September, by which the company cannot resume manufacturing its products until it gets a written notification from independent experts and the agency to do so.

Earlier, in June, the FDA had seized all medicines produced by Caraco following repeated violations of manufacturing standards.

However, the company said it would attempt to have some of the seized inventory released, and said it would be difficult to release other inventory, except $8.1 million worth raw material.

The company said it instituted indefinite layoffs of about 430 employees in two phases. In June, it had terminated the employment of 52 percent of its workforce.

The FDA’s action and the company’s voluntary actions have had, and are expected to continue to have, a material adverse effect on operations and operating results, it said.

As of Sept. 30, the company had $73 million in cash and $10 million in short-term investments, which it believes are enough to support its ongoing business needs.

The company also expects lower research and development expenses in the near future as it puts a part of the related team into working on regaining compliance and technical validations.

On Tuesday, Caraco said its second-quarter sales fell 36 percent to $78.4 million, hurt by “price erosion” on distributed products, the FDA’s action and the cessation of manufacturing.

Shares of the Detroit-based company were down about 2 percent at $3.90 Tuesday morning on the American Stock Exchange.

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For the company press release, double-click [ID:nPnDE99639] (Reporting by Vidya L Nathan in Bangalore; Editing by Maju Samuel)