Dr Reddy’s hits 52-week high on US FDA all-clear to API unit

The shares of Dr Reddy’s Laboratories rose over 2 percent in the early trade to hit a 52-week high of Rs 5,024 on June 19 after the US Food and Drug Administration (FDA) cleared the pharma company’s Bollaram API (active pharmaceutical ingredients) manufacturing facility with zero observations.

The inspection was conducted from June 12 to June 16, 2023.

The US drug regulator also issued an Establishment Inspection Report (EIR) for Dr Reddy’s formulations manufacturing facility in Srikakulam with Voluntary Action Indicated (VAI) classification.

The FDA issues a VAI classification when it finds objectionable conditions but chooses not to take or recommend regulatory action.

At 10.23 am, shares of Dr Reddy’s Laboratories were trading at Rs 4,927.85, up 0.3 percent on the NSE.

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The stock couldn’t hold on to early gains, as a rally of around 5 percent in the past two sessions gave investors leeway to book partial profits, which resulted in the scrip coming off its day’s high.

Intensive regulatory scrutiny has been an overhang for the Indian pharma companies in recent times, especially given the fact that sales from the US market account for a major chunk of revenues for these drug makers.

Brokerage firm Nomura remains positive on Dr Reddy’s, with a “buy” call for the stock and a price target of Rs 5,161. The firm sees India formulation business as the key focus market for the drug maker.

The company is attempting to differentiate through innovation, with a focus on launching less competitive products, Nomura said in its report.

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