Sun Pharma shares jumped nearly 4 per cent on Wednesday, a day after the pharmaceutical company announced conclusion of inspection at its Halol facility. Sun Pharma shares opened 2 per cent higher at Rs. 552.50 on stock exchange BSE. The shares rose further to hit Rs. 560.75 in morning deals, as they registered a gain of 3.8 per cent. Analysts say the development is positive for Sun Pharma. The company announced on Tuesday that it received the EIR or Establishment Inspection Report from the US Food and Drug Administration (FDA) for its Halol facility in Gujarat. The American regulator had conducted inspection at Sun Pharmaceutical Industries’ facility in Halol from February 12 to February 23.
The US FDA concluded that the issues contained in the warning letter issued in December 2015 have been addressed, Sun Pharma said in a regulatory filing to the BSE.
Sun Pharma managing director Dilip Shanghvi described the approval as an “important development” for the company. “We remain committed to following the highest levels of quality and 24×7 cGMP compliance at all our manufacturing facilities globally,” said Mr Shanghvi.
This is a positive development for Sun Pharma, said Angel Broking, which maintains a ‘buy’ call on the pharma company. “Sun Pharma will now be able to restart supplies to its largest market, the US, from the Halol facility, which contributed around 15 per cent to the company’s US revenue in 2015 (i.e FY2016),” the brokerage said.
“Halol getting resolved takes out a big overhang from the stock. It had been stuck for last 3-4 years which also hit important product approvals like Makena, lupron Depot as well as Sparc products. More importantly, the intermittent supplies due to ongoing remediation actions undertaken impacted market share gains which should now resume,” said Praful Bohra, research analyst at Equirus Securities.
“However, Halol resolution is a part of street estimates and hence, numbers may not change,” he added.
At 10:07 am, Sun Pharma shares were trading 2.9 per cent higher at Rs. 556.25 apiece on the BSE, whose benchmark index Sensex was up 73 points, or 0.2 per cent, at 35,765 level.
In September 2015, the FDA had first notified the company of its concerns after an inspection.
In December 2015, the US regulator had issued a warning letter to Sun Pharma indicating dissatisfaction with the remedial measures the company had implemented.