Dr Reddy's stock price on Thursday hit a 52 week low after it announced that "the audit of company's formulation manufacturing facilty at Duvvada, Visakhapatnam, by the USFDA (US Food and Drug Administration) had been completed on March 8...the company has been issued a Form 483 with 13 observations." This, "the company is addressing", Dr Reddy's informed the Bombay Stock Exchange (BSE).
It's the oncology formulation unit of the company that is under scrutiny. The company spokesperson was not able to give details of the nature and intensity of the observation and said these were currently being assessed and evaluated. The focus within the company, at the moment, was on giving a timely response to the regulator on the correctives. But then, without clarity on the type of observations, it is difficult to say anything about the gravity of the problem. Matters around regulatory compliance are apparently far from over for the company and much would now depend on the nature of these observations and by when the company is able to address them.
This also follows the observations that the company received from the USFDA last month. On February 21, Dr Reddy's had informed the BSE that the audit of its API (active pharmaceutical ingredient) manufacturing plant at Miryalaguda, by the USFDA, had been completed that day and that the a Form 483 with three observations had been issued to the company. For the moment, all eyes are now on the expected inspection by the regulator of the third facility of Dr Reddy's at Srikakulam, which had also figured in the warning letter issued to the company by the USFDA in November 2015. It is expected to begin soon.