Lupin shares slip as US FDA issues ten observations for Pithampur unit

Shares of Lupin declined in morning trade on March 31 as the US Food and Drugs Administration issued Form 483 with ten observations for the company’s Pithampur unit.

This comes just a few months after the company received Form-483 with eight observations for its Mandideep-based manufacturing facility. Previously, the company has also received Form 483 with five observations at its Nagpur unit which manufactures injectables.

The US FDA issues a Form 483 when a facility fails to comply with the drug  regulator’s manufacturing norms. In the recent quarters, domestic pharma companies have faced the heat of heightened regulatory scrutiny from the US FDA after physical checks began post COVID. The US FDA’s approval plays a vital role for Indian pharma companies since sales from the US market make up a big chunk of revenue for these drugmakers.

At 09.59 am, shares of Lupin were trading at Rs 640 on the National Stock Exchange, down 1.90 percent from the previous close. The stock has also shed around 13 percent in 2023 so far.

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Lupin’s Pithampur plant also holds significance for the company as it plans to manufacture the generic of Spiriva at the facility. Spiriva is a prescription drug that is used long term to improve breathing in people with certain respiratory conditions.  It faces limited competition in the US and is a high margin product, which is why analysts on the Street expected its launch to support Lupin’s financials in the coming quarters.

However, with the regulatory snag, Lupin’s plans to launch the drug in the fourth quarter have also been delayed. There is also confusion among stakeholders with regards to the actual impact on Spiriva’s launch as the current observations have come for Pithampur’s unit 2 facility, while it was unit 3 where Spiriva was planned to be manufactured.

Global research and broking firm Nomura expects investors to remain high for Lupin as the number of observations received by the company are more. Six observations were also issued for the same facility back in January 2019.

Another brokerage firm, ICICIdirect believes the chances of receiving a warning letter from the US FDA for the Pithampur unit are also high as the facility has been under Official Action Indicated (OAI) status since April 2019.