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Sun Pharma gains 4% on EIR from USFDA for Dadra facility

October 12
20:05 2017

Moneycontrol News

Share price of Sun Pharmaceutical Industries rose 4 percent in the early trade Thursday as it has received an establishment inspection report (EIR) from USFDA for its Dadra formulation facility.

EIR indicates closure of plant inspection by the US regulatory agency.

“We have received a communication from the USFDA releasing a copy of the establishment inspection report (EIR) in respect of the above inspection based upon our responses to the said observation letter,” said company.

USFDA had inspected the plant in April 2017 as regulatory authority issued Form-483.

Dadra is the company’s second largest USFDA-approved plant after Halol with several pending generic filings. Analysts estimate the Dadra formulation plant to generate USD 250 million in annual sales.

The closure of the Dadra inspection by USFDA comes as a huge relief for Sun Pharma, which is trying to resolve a warning letter issued to Halol facility in Gujarat. The company has completed remediation and is awaiting USFDA re-inspection for Halol facility.

Brokerages hail the move as a positive cue for the stock and are pinning hopes on clearances for the Halol unit.

Brokerage: ICICI Sec | Rating: Add | Target: Rs 585

The brokerage house said that the US FDA’s establishment inspection report for Dadra unit is the largest plant for the company in India. In fact, the EIR indicates the company’s focus on bringing all facilities under regulatory compliance. It does not expect the firm to impact financials, but will help valuation metrics improve. Going forward, the focus will now be on resolution of Halol facility and expects FY18 performance to remain muted for the firm.

Brokerage: B&K | Rating: Buy

The broking firm said that receipt of EIR for Dadra unit is quite positive for the firm and removes overhang on the stock with regards to FDA resolution. The next trigger for the stock will be resolution of Halol and added that R&D investment benefits are likely to show up FY19 onwards. Having said that, it expects FY18 earnings for the company to remain weak.

Brokerage: Citi | Rating: Neutral

The global financial services firm said that the EIR at Dadra on expected lines and all eyes are on Halol now. It believes that the company’s base revenue is most exposed among peers. A lifting of the warning letter at Halol could be a key catalyst for the stock.

At 09:16 hrs Sun Pharmaceutical Industries was quoting at Rs 543.65, up Rs 17.85, or 3.39 percent.

Posted by Rakesh Patil

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