US Import alert can poke $100 mn hole in Worckhardt revenue

Wockhardt seems to be the next in line to face the ire of the US Food and Drug Administration.

According to the US FDA website, the drug manufacturer has received an import alert for its Aurangabad plant, which is likely to restrict its exports to a key market.

A report in the Economic Times quoted analysts as saying that the company's topline to likely have a $100 million impact as the USFDA may block new approvals.

Meanwhile, Wockhardt Ltdsaid up to $100 million in annualised revenue could be lost as a result of the US FDA "import alert" on one of its plants, but said it should be able to restore most of that within 6 to 9 months by shifting production elsewhere.

"That is a worst-case scenario," Wockhardt Chairman Habil Khorakiwala said, referring to the $100 million, in a conference call with reporters.

Wockhardt shares fell 20 percent on Thursday to their lowest level in more than seven months after the U.S. drug regulator published an "import alert" on one of its manufacturing facilities.

Earlier in March, the US FDA had found that Wockhardt's Aurangabad unit had deviated from good manufacturing practices.

After the US drug regulator also issued Form 483, which indicates non-compliance with the GMP, the company was to respond within a stipulated period.

If the response is not satisfactory, the FDA would take further action which may even result in a ban on products from the unit.

According to media reports, the company was to respond to the US regulator about the GMPs.

 US Import alert can poke 0 mn hole in Worckhardt revenue

Wockhardt seems to be the next in line to face the ire of the US Food and Drug Administration.

The company's shares have been on the downhill trajectory ever since this news broke. Today investors pummelled the stock which nosedived 20 percent on worries about the likely adverse impact the import alert.

The ET report quoting from an earlier BofA ML report said that the company's current revenue stream is unlikely to be impacted with any adverse action on the Aurangabad unit.

"...should the inspected facility has adverse outcome (warning letter), it would only affect new approvals in injectibles and not affect current revenue stream materially. We estimate less than 5 per cent impact to earnings should this facility come under Warning letter, assuming no new launch takes place from the same," the ET report quoted the brokerage as saying.

Updated Date: Dec 20, 2014 21:03:07 IST