Dr Reddy’s ends 3% higher after US FDA clears Hyderabad facility with VAI tag

Shares of Dr Reddy’s Laboratories Limited settled 3 percent higher at Rs 6,333 on February 12 after the US Food and Drug Administration cleared its Bachupally site, situated in Hyderabad with a voluntary action needed status.

The US FDA issues a VAI classification when it finds some discrepancies during its inspection of any particular facility, however, does not deem it major enough to issue an official action needed status. A VAI classification also clears the road for the facility under review to manufacture and market products.

The US FDA has classified the inspection as Voluntary Action Indicated (VAI) and issued an establishment inspection report to conclude the inspection is closed, the company said in an exchange filing. The shares pared gains as it touched a day high of Rs 6,388 on the bourses. In the last three months, the stock has given a return of 16 percent.

Some analysts had anticipated the unit to receive a warning letter from the US FDA after it was slapped with 10 observations by the drug regulator. The US drug regulator had previously inspected the facility between October 19-27, last year, post which it had issued a Form 483 with the 10 observations.

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During the third quarter results announcement, Dr Reddy’s Laboratories stated that the US Food and Drug Administration (FDA) had concluded inspections at its Bachupally facility. The company submitted responses to the observations within the specified timelines.

In the October-December period, the company reported a net profit of Rs 1,378.9 crore, up 10.6 percent from the year-ago period. Revenue from operations came increased to Rs 7,214.8 crore, up 6.6 percent from the year-ago quarter. The company said that the YoY growth was largely driven by market share gains for its existing products in North America and the continuation of Dr Reddy’s growth journey in Europe.

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