Sun Pharma's earnings impact to be limited, says Barclays

Foreign brokerage firm Barclays estimates USFDA's Import Alert (IA) on Sun Pharma's Karkhadi plant to have a negligible impact, it said in a research report.
The US Food and Drug Administration banned import of drugs from the company's Karkhadi facility in Gujarat for violation of manufacturing norms.
Sun Pharma said that the facility in question was a dedicated cephalosporin plant and that the IA was a follow-up to observations from the previous inspection and due to non-compliance of regulations.
This is the first of Sun's 14 global FDA-approved facilities, excluding Caraco to receive an IA and should not imply any read-through for its other facilities. We would view any negative reaction in the share price as an enhanced opportunity to accumulate, Barclays report said.

Karkhadi facility was acquired from Phlox Pharma in 2004. It is dedicated Cephalosporin facility, generating less than 1 percent of Sun's sales.
"We expect Karkhadi impact to be negligible. However, we note that Sun's premium valuations yield limited downside support, should such operational risks become repetitive, especially in light of a recent Class II product recall for gGlumetza," the report said.