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The stock of Divi’s Laboratories shed 22 per cent last Friday. This was triggered by reports that the observations by the US FDA at the company’s Visakhapatnam – Unit II facility are critical in nature. Reports suggest that the observations were made on three grounds — lack of proper control over computer system, equipment not maintained to ensure quality strength, and documentation not maintained or was inaccurate.
On December 7, the company informed the bourses that the facility was inspected, , form 483 has been issued with 5 observations and that it will respond within the stipulated time. Following media reports, the company clarified that operations have not been impacted by the observations.
While observations reported by media are not positive, the concern is whether these will translate into a warning letter. The impact in such case may be significant with the bulk of US sales comes from the Vizag Unit II facility; the US is estimated to account for about a third of the company’s revenue.
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