Shares of Sun Pharmaceutical Industries and Ranbaxy Laboratories have dipped up to 4% extending their previous day’s fall on reports of drug regulator, US Food and Drug Administration (FDA) conducting a surprise inspection of the Sun Pharma’s manufacturing plant at Halol in Gujarat.
Halol plant, one of the major facilities of Sun Pharma supplying to the US market, was last inspected in September 2012. According to sources, it contributes to around 40% of US sales and around 25% of consolidated profit of the company.
Sun Pharma was down 3.4% at Rs 795, extending its Thursday’s 4% fall on BSE. The stock opened at Rs 816 and touched a low of Rs 789 so far.
Ranbaxy Laboratories too plunged over 5% to Rs 590 on BSE. The stock dipped almost 10% in past two trading sessions from Rs 653 on September 10.
Results of the ongoing inspection at Sun Pharma's Halol plant would be significant given its importance to the companies US revenues as well as for its overall performance going forward. During FY2014, the US business accounted for the 60% of the overall sales of the company (Rs 16,000 crore), says Ms. Sarabjit Kour Nangra, VP Research - Pharma, Angel Broking.
Going forward, after the merger with Ranbaxy Labs, its dependence on the region would reduce to around 45% of the expected sales in FY2016. Thus the share of the plant in the overall sales would reduce going forward (expected to be around 10% of sales in FY2016), while profitability could be impacted, given low profitability of Ranbaxy labs, in case of an adverse implication, though too early to call given that company has voluntary done some withdrawal and given the importance of the facility. In case of any adverse impact the company could witness a dip of around 15% from these levels, said Ms. Nangra.
Sun Pharma had announced the acquisition of Ranbaxy Laboratories for $4 billion in April 2014. Ranbaxy shareholders will get four shares of Sun Pharma for every five shares held by them.
Halol plant, one of the major facilities of Sun Pharma supplying to the US market, was last inspected in September 2012. According to sources, it contributes to around 40% of US sales and around 25% of consolidated profit of the company.
Sun Pharma was down 3.4% at Rs 795, extending its Thursday’s 4% fall on BSE. The stock opened at Rs 816 and touched a low of Rs 789 so far.
Ranbaxy Laboratories too plunged over 5% to Rs 590 on BSE. The stock dipped almost 10% in past two trading sessions from Rs 653 on September 10.
Results of the ongoing inspection at Sun Pharma's Halol plant would be significant given its importance to the companies US revenues as well as for its overall performance going forward. During FY2014, the US business accounted for the 60% of the overall sales of the company (Rs 16,000 crore), says Ms. Sarabjit Kour Nangra, VP Research - Pharma, Angel Broking.
Going forward, after the merger with Ranbaxy Labs, its dependence on the region would reduce to around 45% of the expected sales in FY2016. Thus the share of the plant in the overall sales would reduce going forward (expected to be around 10% of sales in FY2016), while profitability could be impacted, given low profitability of Ranbaxy labs, in case of an adverse implication, though too early to call given that company has voluntary done some withdrawal and given the importance of the facility. In case of any adverse impact the company could witness a dip of around 15% from these levels, said Ms. Nangra.
Sun Pharma had announced the acquisition of Ranbaxy Laboratories for $4 billion in April 2014. Ranbaxy shareholders will get four shares of Sun Pharma for every five shares held by them.