Sun Pharma Shares Decline

On May 30, Sun Pharmaceutical shares were trading lower following reports that the US Food & Drug Administration (US FDA) had issued four observations regarding one of the company's manufacturing facilities. As of 1:30 pm IST, Sun Pharma's stock was priced at ₹1,459.4 per share on the NSE, marking a 1.3% decline from the previous session's closing price. 

As reported by CNBC-TV18, the US FDA conducted an inspection of Sun Pharma's Dahej facility from May 10 to May 17. Following this inspection, the agency issued four observations along with Form 483. Additionally, the company was instructed to identify impurity reference standards prior to analytical standards. The US FDA defines a reference-standard material as a highly purified compound that is thoroughly characterized.

Reports indicate that the US FDA made several observations regarding Sun Pharma. Firstly, the company did not take sufficient precautions to prevent contamination of the active pharmaceutical ingredients (API). Another observation pointed out the absence of procedures for routine maintenance.

Additionally, Sun Pharma failed to document their material sampling methods. The company was also instructed to identify impurity reference standards before analytical standards. According to the US FDA, a reference-standard material must be a highly purified and well-characterized compound.

Dahej is a crucial facility for Sun Pharma, significantly contributing to its exports to the US, which is a primary market for the company. Although Sun Pharma does not disclose the specific revenue contributions of individual units, Dahej is recognized as one of its most important sites for exports to the US market, a core geography for the company.

For the March quarter, Sun Pharma's US business accounted for 33.5% of the company's total revenue. Despite a 10.9% increase in US formulation sales during the quarter, the $476 million figure fell short of the lowest analyst estimate, which was $485 million.

Brokerage firm Citi noted that while the country's largest drug manufacturer reported results in line with expectations, the guidance suggests margin pressure for the financial year 2025. Among the 40 analysts covering Sun Pharma, 27 maintained a Buy recommendation, nine rated it as Hold, and four issued a Sell rating.

Sun Pharma's shares have fallen by 2% over the past month, but they have increased by 17% on a year-to-date basis. Over the past year, Sun Pharma shares have surged approximately 52%, compared to a 22% increase in the Nifty 50 index.

Sun Pharmaceutical Industries Ltd (Sun Pharma) is a specialty pharmaceutical company that provides a wide range of pharmaceutical formulations, including branded generics and generic pharmaceuticals. The company's product portfolio encompasses treatments for psychiatric, neurological, nephrological, gastroenterological, orthopedic, ophthalmologic, and cardiovascular diseases and disorders.

The company engages in product development, process chemistry, and the manufacture of complex formulations, active pharmaceutical ingredients (APIs), and over-the-counter products. It offers medications in various dosage forms, including tablets, capsules, injectables, inhalers, ointments, creams, and liquids. Sun Pharma operates manufacturing facilities across North America, Latin America, EMEA, and the Asia Pacific regions. The company is headquartered in Mumbai, Maharashtra, India.