South Korea's Celltrion shares drop after U.S. FDA warning letter

SEOUL (Reuters) - South Korea’s Celltrion Inc shares fell on Thursday after the pharmaceutical company said it had received a warning letter from the U.S. Food and Drug Administration (FDA).

The logo of Celltrion is seen at company's headquarters in Incheon, South Korea, October 28, 2016. REUTERS/Kim Hong-Ji

Investors appeared to be taking the chance to book profits following the stock’s nearly 200 percent rise since the end of 2016 on the back of the bright outlook for its cut-price copies of blockbuster biotech drugs, analysts said.

“The FDA issue was first raised last year, and it wasn’t for a production issue, it was a packaging issue. This appears to be another adjustment currently happening to pharma stocks,” Shin Hyun-joon, analyst at Hanwha Securities, said.

The Korea SE Pharmaceutical Index, which tracks South Korean pharma stocks, became volatile in January after jumping 63 percent in 2017. It dipped as much as 11 percent last week before rebounding.

Celltrion shares fell 5 percent on Thursday, compared to a 0.2 percent gain in the wider market.

The FDA letter to Celltrion raised issues about its pharmaceutical manufacturing process, Celltrion said in a statement on its website.

The request was part of a routine process for the pharmaceutical industry and the response would be supplied in 15 business days as required, a Celltrion spokeswoman said.

The European regulator had verified in early January that the quality of its copies of rheumatoid arthritis drug Remicade, cancer drug Rituxan and breast cancer drug Herceptin were up to standard, the company said.

“Celltrion remains confident in the safety and efficacy of its products” manufactured at its site in Incheon, South Korea, the company said.

Celltrion has received approval for its Remicade biosimilar in the United States and Europe, and for its Rituxan biosimilar in Europe.

Reporting by Joyce Lee; Additional reporting by Dahee Kim; Editing by Himani Sarkar and Stephen Coates