IPCA Labs tanks into deep red

IPCA Labs is the top loser on the BSE, going down almost 15.5% to Rs.437, which is very close to its one-year low of Rs.435. Volumes are massive – from a two-week average of 5072 shares being traded, today morning alone over 5 lakh shares were traded.

Any pharma stock tanking, the reason is almost always US FDA. The FDA has denied permission to some drugs which are made at its three plants - Ratlam, SEZ Indore and Piparia. These are the same three units which in Feb’16 had received a warning from the FDA.

The FDA stated that all drugs made at these facilities will be henceforth refused admission into the United States. The company has stated that this ban will continue till such time that the company is able to show that drugs made these sites for the US market are in compliance with Current Good Manufacturing Practice (cGMP).

The only carrot – the API Chloroquine phosphate made at Ratlam is an exception wherein it will be reconsidered if shortage and/or medical necessity implication change.