Cipla’s stock price dropped by 7% to Rs 956.20 during intra-day trading on Monday, following the company’s announcement that the US Food and Drug Administration (FDA) had issued a Form 483 containing 8 observations after inspecting its manufacturing facilities in Pithampur.
According to a filing made by Cipla to the stock exchange, the United States Food and Drug Administration (USFDA) conducted an inspection of the company’s Pithampur manufacturing facility from 6th to 17th February 2023. The inspection was carried out to evaluate whether Cipla is following the current Good Manufacturing Practices (cGMP) standards, which are designed to ensure that drugs are consistently produced and controlled according to quality standards.
Following the inspection, Cipla has been issued with 8 inspectional observations in Form 483 by the USFDA. In response, Cipla has stated that it will work closely with the USFDA to address these observations comprehensively within the stipulated time. As of 9:23 AM, Cipla’s stock was trading 5% lower at Rs 971.60, whereas the S&P BSE Sensex had risen by 0.16%
The stock of a pharmaceutical company, Cipla, has hit its lowest trading level since July 2022. Over the past month, Cipla’s performance has been underwhelming, with an 11% drop, compared to a 1% gain in the benchmark index. This poor performance is further compounded by the fact that on January 26th, following the announcement of Cipla’s October-December quarter (Q3FY23) earnings, analysts at Prabhudas Lilladher revised their earnings estimates for the company downwards. Specifically, they reduced their projections for Cipla’s FY24/FY25 earnings by approximately 4%. This revision was made in light of delays in key product launches in the United States and lower anticipated profit margins for the company.
A recent report from a brokerage firm has highlighted the positive performance of Cipla during the third quarter of the fiscal year 2023. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) were largely in-line with the firm’s estimates, and aided by higher gross margins and strong sales in the US. As a result, the brokerage firm is optimistic about Cipla’s prospects, forecasting an 18% compound annual growth rate (CAGR) in earnings per share (EPS) over the next few years.
According to the report, Cipla is well-positioned for growth across several key segments, including India and the US. The company has seen strong traction in respiratory and other portfolios, which is expected to drive growth going forward. In addition, the firm expects Cipla’s domestic formulation business to potentially grow by 10% or more in the near future.
The report also highlighted the sustainability of Cipla’s current revenue levels in the US, which is expected to be backed by potential key launches in the future. This is particularly significant, given the challenging regulatory environment in the US, and the difficulty many pharmaceutical companies face in gaining approval for new products.
Overall, the brokerage firm’s report suggests that Cipla is a company with strong fundamentals and a promising outlook. With a diverse portfolio of products and a presence in key global markets, the company is well-positioned for continued growth and success in the years ahead.
