Any update on the FDA audit?
Officially it may come after 3.30PM
Unit-2 has been inspected by US-FDA from September 11 to September 19, 2017.
This inspection was for full cGMP and verification of all Corrective Actions proposed against the previous Inspection observations. Divi’s Laboratories Limited announces that all previous observations have been confirmed as completed and resolved.
On completion of this inspection, Divi’s Laboratories Limited has received a Form 483 citing six observations which are procedural and the company will be responding to these within the stipulated time.
I am new to pharma companies investing. I hold Laurus labs, they also finished USFDA and WHO audits on 15th. But my question why Laurus labs stock price not reacts and DIVIS labs react to inspections. Is there specific things we need to dig inside. As companies publish audit is finished.
Disc: Invested in Laurus labs so I am interested in how this USFDA inspection things work.
Divis lab share price was around 1100-1200 when it got FDA observations and fell to 700+. After Import alert, it fell to 600+
few months back when FDA removed few observations rose to 760+ and then fell to 630+. Now market feels like 1100+ is price it should be so its increasing day by day.
Disc: not invested in Divis now. Sold it when it reached 730+
Divi’s Laboratories has been informed by the US-FDA that it will be lifting the Import Alert 66-40 and moving to close out the Warning letter issued to the company’s Unit-II at Visakhapatnam.
The management was quite swift in getting the re-inspection done and making sure that import alert is lifted. I think all this happened in span of 6 months which is quite commendable if you look at other pharma companies who are facing USFDA issues.
Divi’s received EIR from US FDA for unit II. indeed its a commendable job by the management in resolving the issue swiftly.
"We had earlier informed the Exchanges that the company’s Unit-II at Visakhapatnam was inspected by US-FDA in September, 2017 wherein a Form-483 was issued with 6 observations.
In this regard, we wish to inform you that we have now received an Establishment Inspection Report (EIR) from US-FDA for our Unit-II, as closure of audit by FDA."
This worked quite well. Hopefully in a quarter or 2 results would be much better.
Divi’s Laboratories announces that its Unit-I at Choutuppal, Telangana State has had an inspection by the US-FDA from 14th May 2018 to 16th May, 2018. This was a general cGMP inspection by the FDA. The inspection has been concluded with no 483 observations
ashit, the link provided by you leads to PI industries and not Divis labs
Sorry for that
@sudheerg & I attended Divi’s AGM which was rather short. Updates below -
There is/was a lot of dependency on China for what are called “Pre-Chemistry” materials. These do not require any cGMP & were sold at 1$, 2$ per kg. If these were to be made under cGMP, costs would escalate. Due to environmental reasons, some factories in China are closed & it is expected that some may never open. This has lead to 100 to 200% hike in prices of pre-chemistry materials.
To control the impurities, Divi’s was making large part of these in-house but still some part was imported. Due to this overall, impact is not very high. Some of these are difficult to make especially on handling side. We are making investments in a brownfield project to create totally integrated API capacity.
Secret of Higher Profits
People kept asking secret of higher OPM & any new molecules company is working on. The chairman said - “Old is Gold, you have to trust me”. e.g. Neproxane demand is growing at 6% as people are living longer & older people need more of these medications.
Our R&D is focused on continuous effort to reduce costs, introduce more automation, less or zero effluent discharge.
Further there are some patent expiries upcoming & company has made investments in creating capacities.
Impact of $/Rupee Movement
Almost all participants asked about impact of $/Rs. movement. The chairman did not answer this question other than saying that we import ~30% of RM costs & ~90% of our products are exported. The AR18 holds some pointers to this question -
“Our efforts are therefore on based on what is right
from a competitiveness perspective, rather than from a
treasury perspective. In any event, with the volatility, the
company’s approach is to minimize risk and not mitigation.
The company is very cautious towards hedging as it has
a cost as well as its own risks and assesses any cost benefit
in this regard besides engaging with customers
addressing such risks.”
Secret of Fast FDA Resolution
Almost everyone asked about this. The company engaged consultants & spent 50Cr on this front. The chairman said that team not only looked at issues at current year but what would be required over next 5 years from regulatory POV & has made investments. Similar is the case for investments from cGMP & environmental side.
The company is facing issues at its Kakinada greenfield project from locals.
Disc - tracking position to attend AGM, do not understand business fully, studying
Two good documents on Divi’s: