(sarangg) #107

Superficially, business looks like a dream from growth >20% and RoE >35% percentages, and P/E ratio is ~13 net of cash. We already know that this investigation itself has not had much impact (especially after more products were removed), and that although further growth might be slowed down, the real question is whether the company is worth even 620 a share knowing that further growth might slow. From the looks of it, a 13x P/E ratio shows all further growth discounted, so i’m considering investing.

Disc: I currently hold long exposure to DivisLab by selling Put contracts

Also, I think members on this forum should consider using their directional views on a stock like divis to try option contracts. For example, if you perceive divis to have gotten past its FDA issues and expect it to slowly drift up, it would be a good idea to sell puts (and maybe even OTM Calls) on Divis for maximum profit. I think option strategies can be great when paired with fundamental analysis

(praneshrvikram) #108

When a company is audited by agency like USFAD, it is quite normal to have some observation and non conformities.What is worrying me is falsification of documents like maintenance log of M/Cs and incinerator log. This rises serious concern regarding the integrity of the management. Management was busy in making the maximum utilisation of the plant and failed to comply with the regulation. To make things worse documents were deliberately falsified.
USFAD inspection is due for Hyderabad plant.i seriously doubt whether Divis will clear the inspection without warning or import alert.

(Bhaskar Jain) #109

“Your quality system does not adequately ensure the accuracy and integrity of data to support the safety, effectiveness, and quality of the drugs you manufacture,” the FDA said in the letter to Mylan.

The FDA outlined several violations at Mylan’s Nashik facility, including a failure to “thoroughly investigate” unexplained discrepancies in drug batches and cited examples of “missing, deleted, and lost data”.

(Kavin) #110

Critical points that FDA is looking at in terms of any observations are

  1. Did you throroughly investigate and find the root cause that caused any drug failure .If so, what is the action taken?
  2. what are all the systematic deficiencies identified ? What have you done to make sure it is rectified and what control process have you built to ensure that these do not occur again in future?
  3. If you have more than one plant , are you making appropriate changes to procedures and control process based on the learnings you have had in one plant across all plants. Basically institutionalising the corrective action .
  4. Data Integrity is looked at very carefully and they are not compromising on this . They want a kind of straight through processing in terms of recording data which is very difficult to achieve . Something like a complete log of everything from recording , editing and deleting the data.
  5. They want to ensure a complete documentation of issues and remedies to make sure we are not dependent on any person and the system would do that job.

I have no pharma experience but I work on a BCBS 239 ( Risk Data Aggregation and reporting for trading risk reporting ) and I find similarities in the approach of FED and FDA. Institutionalising a change is very difficult eventhough the systems I work on is very sophisticated and modern. I assume the system in place in manufacturing set up to be inferior compared to a bank.Also, regulators and 3rd party auditors want documentation of every single thing .This , in my opinion, is very new to Indian culture and hence it would take much much longer time.

Please remove the post if it is not adding any value here.

(Mohil M) #111

:angry: US FDA issues warning letter to Visakhapatnam unit-II of Divi’s Lab. more
However, the company has not yet provided details of the warning letter :worried:, as a novice investor, request VPs to share more insights on this story.

Disclosure – Invested

(Kavin) #112

Warning Letter for Unit II Divis has been posted in USFDA website . They have a separate section for Data Integrity remediation which is similar to some of the other pharmaceutical companies’ Warning Letter .


(KKP_Investor) #113

There is much more to the FDA inspections, FDA results and also the Sales/Profits/Margins. Until Trump resolves some of the challenges with the new Health Care Plans, and also continues to prefer Generics (regardless of where they are manufactured) it will be hard for most of these Pharma’s to come alive in a huge way.

Sell off might have lots of post-down-move-logic associated with it, and there might be talk of revivals also, but I do not feel that we will see much headway on this front.

In the meantime, I am not waiting around. If the sell offs are to Fib Support levels (human psych) then I am just doing SIP buying in MOST of the Pharma, not knowing who will have a leg up first, but when the pharma tide comes back into vogue, we will see the revival of MOST of them (maybe not all), cause Baby Boomers cannot survive with the “magical pills” and most baby boomers around the world are taking 2 pills or more.

When someone in the westernized world takes 2 pills, the 3rd and 4th invetably appears on the horizon due to the supression of the side effects. Indian, Chinese, Japanese etc are smart consumers. They will NOT take these pills as much as possible and solve root cause. NOT true with the ‘westernized thinkers’.

(Gary) #114

So, this is the big dilemma I have right now. Reading Divi’s warning letter gives a clear impression that this is a long haul and does not look likely to be resolved soon. For example, how often does one hear that a company didn’t have “basic” quality control. Further, there’s never a single cockroach in the closet and further such issues can’t be ruled out.

So, how does one find out when is the turning point (if at all) … this is clearly a falling knife situation, isn’t it?

Excerpt from the letter -
In your response, you stated that you have made several corrective actions, including updating your procedure Peak Integration Techniques for Chromatography
to include controls on the use of inhibit integration events. However,
your response is inadequate in that it did not provide specific
corrective action or supportive documentation for each drug’s
chromatographic processing parameters, including API not cited on Form
FDA 483. You have not shown how you will ensure that your test methods
are appropriate to determine whether your API conform to established
standards and specifications. Consequently, the summary data you
provided does not demonstrate that previously released lots do not
contain excessive levels of unknown impurities.

During the inspection, our investigators discovered a lack of basic
laboratory controls to prevent changes to and deletions from your firm’s
electronically-stored data in laboratories where you conduct CGMP
activities. Specifically, audit trail functionality for some systems you
used to conduct CGMP operations was enabled only the day before the
inspection, and there were no quality unit procedures in place to review
and evaluate the audit trail data.

(Ketan) #115

As noted in one of the thread, there’s common thread going through such FDA cases. With my limited (very limited, I must say) knowledge, this seems to be going the way IPCA is moving…

(praneshrvikram) #116

Worst is yet to come.Hyderabad Unit is due for US FDA inspection. I am afraid more cockroaches might emerge. It creates serious doubt about managements integrity.

(anantshri_gupta) #117

Small explosion and fire in the dumping yard of Divi’s Bheemili Mandal on Saturday May 20.

(Bheeshma Sanghani) #120

You should avoid getting into price targets. It is not encouraged here.


(ashit) #121

from report :
Divis has already hired a thirdparty consultant to enact remediation measures and help the company to prepare for Unit-1 inspection. We have witnessed with DRRD and SUNP that batch-by-batch testing of products leads to a delay in supplies and an increase in cost.

(ashit) #122


Divi’s Laboratories has been informed by the US-FDA that it will lift the Import Alert 99-32 imposed on the company’s Unit-II at Visakhapatnam.


(Niraj Kumar) #123

This is just a minor breather and reduction of charges under clause 99-32 however import alert on the products and remedial action required status stay as it is till further clarity emerges. Clause 99-32 mainly pertains to causing disruption during inspection which US FDA agreed to withdraw but data integrity issues remains as it is.
Disc: No investment

(MHS) #124

Q1_FY18 Results:

(ashit) #125

The inspection started on Monday and is expected to conclude within a week, a company official aware of the development told BloombergQuint on the condition of anonymity


(Parag) #126

The market is reacting as if Divi got clearance from the FDA. Historically, FDA can take months (may be 3/4 months) before issuing the approval or retaining the warning. Looking at the stock price, the market is prejudging a positive scenario.
Good for stock as of now !


Absolutely do not post any insider info on this forum.

(Chaitu) #129

Thanks for informing me Anant, so far i don’t this rule saying insider info should not be published, hence removed my post.