Piramal Pharma gets 6 observations from USFDA, stock tumbles

The US drugs regulator conducted pre-approval inspection and good manufacturing practices inspection of the company’s Lexington facility from December 27 to January 10

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The share price of newly-listed Piramal Pharma dropped in the red zone on January 11 after the US Food and Drug Administration (USFDA) issued six observations for its Lexington facility.

The stock opened higher at Rs 120 from the last close of Rs 119.05 on the National Stock Exchange but at 11.30 am, it dropped 2.5 percent to Rs 117.

After the demerger from Piramal Enterprises, the stock listed on the exchanges of October 19, 2022 and has fallen more than 30 percent ever since.

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US FDA conducted Pre-Approval Inspection (PAI) and Good Manufacturing Practices (GMP) inspection of the Lexington facility from 27 December to 10 January.

“At the conclusion of the inspection, the US FDA issued a Form-483, with six observations. The observations were classified under VAI (Voluntary Action Indicated) and does not relate to data integrity,” the company said in an exchange filing.

The company is preparing a detailed response, which will be submitted to the regulator within the stipulated timeline, it added.

According to Jefferies, the stock is trading “at a steep discount to comparable Indian peers” and hence it makes a case for buying the stock. It feels that the company’s business is at an inflection point now.

“Piramal Pharma’s contract development and manufacturing (CDMO) business is on the cusp of a turnaround as headwinds faced over the last 12-18 months are getting resolved,” the firm said. “CDMO turnaround, steady growth for complex hospital generics and scaleup of consumer health should drive 12 percent and 21 percent revenue and Ebitda CAGR over FY22-25 and allay leverage concerns.”

Jefferies has set a 12-month target of Rs 150 on the stock.

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