Dr Reddy's Labs shares in red after USFDA issues form 483 with four observations

On June 10, shares of Dr. Reddy's Laboratories fell in early trading after the US Food and Drug Administration (USFDA) issued a form 483 with four observations concerning its API manufacturing facility. As of 9:20 am IST, the Hyderabad-based pharmaceutical company's shares were trading at ₹6,047.1 on the NSE, down 0.2% from the previous close.

"This is to inform you that the United States Food & Drug Administration (USFDA) today completed a GMP inspection at our API manufacturing facility (CTO-6) in Srikakulam, Andhra Pradesh," Dr Reddy's Laboratories said in a regulatory filing.

The USFDA conducted an inspection of Dr. Reddy's manufacturing facility in Srikakulam, Andhra Pradesh, from May 30 to June 7, 2024. Dr. Reddy's has stated that it will address the observations within the allotted timeframe. According to the USFDA, a Form 483 is issued to a company's management at the end of an inspection if the investigator has identified any conditions that might violate the Food, Drug, and Cosmetic (FD&C) Act and related Acts.

However, a Form 483 does not constitute a final FDA determination regarding the facility’s compliance with Good Manufacturing Practices (GMP). Once a Form 483 is issued, the company has 15 days to submit a response to the FDA, detailing the steps it will take to address the observations.

Last month, US FDA had issued Form 483 with two observations after the inspection conducted at its formulations manufacturing facilities (FTO-7 & FTO-9) in Duvvada, Visakhapatnam, Andhra Pradesh.

Dr. Reddy’s Laboratories reported a net profit of ₹1,307 crore for the March quarter of FY24, exceeding expectations and marking a 36% increase from the same period last year. The company had reported a profit of ₹960 crore in the corresponding quarter of the previous year. Additionally, revenue for the March quarter stood at ₹7,083 crore, up 12% from ₹6,297 crore in the year-ago quarter.

Over the past year, shares of the firm have gained around 29% as against a 25% rise in the benchmark Nifty 50 index. 

Dr. Reddy's Laboratories Ltd (Dr. Reddy's) is a pharmaceutical company specializing in the manufacturing and marketing of generic formulations, active pharmaceutical ingredients (APIs), biosimilars, and proprietary products. Their generic products are designed to treat a range of conditions, including gastrointestinal disorders, various types of cancer, pain, cardiovascular diseases, central nervous system disorders, infectious diseases, and pediatric diseases.

The company also develops and markets generic biosimilar products. Its pipeline includes New Chemical Entities (NCEs) aimed at treating metabolic disorders, bacterial infections, pain, and inflammation. Dr. Reddy's markets its products in the US, Europe, Latin America, and Asia. The company is headquartered in Hyderabad, Telangana, India.