Economy

Divis Labs spikes as USFDA to lift import ban

Divis Laboratories was biggest gainer among Pharma Index stocks, rising 16 percent as the USA health regulator will soon lift the import alert for unit 2.

Shares of Divi's Laboratories surged as much as 21.4 per cent in Thursday's trade as the US Food and Drug Administration has said that it would lift the import alert on the company's Visakhapatnam unit and will close the warning letter it had issued earlier.

The news is a sentiment booster for other healthcare companies as it raised hopes for early USFDA clearance to other companies' plants.

In past three months, the stock zoomed 60% as compared to 3% rise in the benchmark indices the S&P BSE Sensex and Nifty50.

"This is positive for the company as it eliminates the downside risks on earnings", brokerage firm Edelweiss Securities said in a note.

US FDA had lifted import alert 99-32 issued on the same unit in July.

Divi's Laboratories today said the United States health regulator will lift an import alert imposed on the company's Unit-II in Visakhapatnam and is moving to close out the warning letter issued to the unit.

According to details on the USFDA's website, import alert 99-32 is issued when a firm refuses an FDA inspection of its facility, while import alert 66-40 is issued to companies that do not comply with good manufacturing practices.

The US drug regulator, after its reinspection of the plant during September 11 to 19, 2017, had issued six observations by raising Form-483.

The net profit stood at Rs 207 crore in the second quarter of fiscal 2018 against Rs 223.8 crore in the year ago period.

Divi's Laboratories manufactures and markets generics, APIs and intermediates.



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