Sun Pharma shares dive after U.S. seizes unit's drugs

MUMBAI Fri Jun 26, 2009 12:52pm IST

A broker looks at her computer terminal at a stock brokerage firm in Mumbai in this May 2009 file photo.  Sun Pharmaceutical shares plunged as much as 17.6 percent on Friday, their biggest intra-day drop, a day after U.S. authorities seized drugs made by its U.S. unit for manufacturing-standards violations. REUTERS/Punit Paranjpe

A broker looks at her computer terminal at a stock brokerage firm in Mumbai in this May 2009 file photo. Sun Pharmaceutical shares plunged as much as 17.6 percent on Friday, their biggest intra-day drop, a day after U.S. authorities seized drugs made by its U.S. unit for manufacturing-standards violations.

Credit: Reuters/Punit Paranjpe

Related Topics

Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

MUMBAI (Reuters) - Sun Pharmaceutical shares plunged as much as 17.6 percent on Friday, their biggest intra-day drop, a day after U.S. authorities seized drugs made by its U.S. unit for manufacturing-standards violations.

U.S. officials said on Thursday all medicines made at Caraco Pharmaceutical's three manufacturing plants in Michigan were seized. This may include up to 33 drugs, including generic versions of heart, pain and psychiatric medicines.

Sun Pharma, India's largest drugmaker by market value, owns about three-fourths of Caraco. The U.S. firm recently signed an agreement to market Sun's Abbreviated New Drug Applications, or ANDAs, which are either approved or awaiting approval at the U.S. Food and Drug Administration (FDA).

"This is going to have a negative impact on Sun for the near to medium term, but as the stock has fallen significantly today, I don't see a major sell-off," Alex Mathew, head of research at Geojit BNP-Paribas Financial Services, said.

Caraco shares on Thursday plummeted 43 percent to an all-time low of $2.39 after U.S. Marshals, at the request of the FDA, seized drugs and ingredients at the company's facilities.

FDA inspectors found poor control of raw materials, higher-than-normal variability in tablet manufacturing processes and "poor decisions made by the company's management who are responsible for the quality of drugs being manufactured," FDA consumer safety officer David Jaworski said.

Sun and its units supply Caraco with some raw materials and formulations, assist in acquiring machinery and equipment to enhance production capacities, and provide workforce assistance.

Also, four of the nine Caraco directors are, or were, affiliated with Sun, according to Caraco's website.

A spokeswoman for Sun declined to comment, while Caraco could not be immediately reached.

In February, shares of another Indian drugmaker, Ranbaxy Laboratories, had taken a hit after U.S. regulators said a plant owned by the drugmaker had falsified data.

The stock has since recovered after its parent, No.3 Japanese drugmaker Daiichi Sankyo, replaced Ranbaxy chairman and CEO Malvinder Singh, a member of the Indian firm's founding family, with its own executive in a bid to resolve problems.

"We saw similar problems with Ranbaxy a few months back, but Daiichi took action. Sun Pharma can also resolve this problem with U.S. authorities," Mathew said.

Shares in Sun Pharma, which has a market value of about $5 billion, were trading down 12.2 percent at 1,140 rupees by 0710 GMT, after sliding to 1,070 rupees, their lowest since April 8. In comparison, the main BSE index was up 1.3 percent.

(For more news on Reuters Money click in.reuters.com/money)

FILED UNDER:

REUTERS SHOWCASE

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

Reuters Poll

Reuters Poll

GDP growth to slow to 5.1 pct, but no rate cut yet  Full Article 

Oil Prices Fall

Oil Prices Fall

Oil at four-year low as OPEC production cut looks unlikely  Full Article 

Hughes Dies

Hughes Dies

Australia batsman Hughes passes away aged 25  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Google in Europe

Google in Europe

Insight - Behind Google's Europe woes, American accents  Full Article 

India-focused Funds

India-focused Funds

India-focused hedge funds up over 40 pct YTD - HFR  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

Land Disputes

Land Disputes

Disputes over land for industry on the rise in India, angering locals - charities  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage