UPDATE 1-FDA raises concern over drug production process at India's Cadila

(Adds Cadila statement, updates share move)

MUMBAI, July 31 (Reuters) - India’s Cadila Healthcare Ltd is responding to certain observations the U.S. Food and Drug Administration (FDA) made after conducting a “product specific” inspection of its Moraiya manufacturing plant, a company spokeswoman said on Thursday.

Sources with direct knowledge told Reuters earlier that the FDA expressed concerns over the manufacturing process of at least one product at Cadila’s Moraiya facility in the western Indian state of Gujarat.

“This was a product specific review and the inspection was limited to the review of documents for filed ANDA before its approval and the observations are being responded to,” the Cadila spokeswoman said in a statement.

ANDA is an application drugmakers file with the FDA seeking approval to launch a new generic drug.

There is no business impact from the FDA action and Cadila has not received any observations on the standard manufacturing practices at the Moraiya plant, the spokeswoman said.

She did not immediately respond to a request seeking details on the inspection.

The FDA communicated its concern to Cadila in a Form 483, the company spokeswoman said. A Form 483 is a letter the agency issues after completing an inspection to outline conditions that the FDA believes violate standard regulations.

Once a Form 483 is issued by the FDA, the company has 15 days to respond before the FDA takes further action.

Cadila, among India’s top 10 drugmakers, has one of the largest pipelines of 158 generic drugs awaiting approval from the FDA, according to company filings.

Cadila’s shares dropped as much as 10.5 percent on Thursday. The stock ended down 4.5 percent at 1,116.15 rupees, while the main market index fell 0.9 percent.

Separately, Citigroup on Thursday downgraded Cadila’s stock to “sell” from “buy”, saying the company’s valuations have moved well ahead of its fundamentals. Indian brokerage IDBI Capital also cut its rating on Cadila stock to “accumulate” from “buy”. (Editing by Sumeet Chatterjee and Matt Driskill)