Regarding IPCA Labs, I too invested after listening to the management concall. I think all of us were misled by the managament about the severity and time needed for the remedial plans to be accepted by USFDA. Management then had seemed confident of resolving the issues by the time they had promised. I had sent the following mail to them but did not receive a reply.
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Dear sir,
I and my family members are shareholders of IPCA and we have been patiently holding our shares hoping for the US FDA issues to be resolved. The following are taken from my notes based on management interviews and earnings conference call.
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FDA issues warning letter on Ratlam on 18 july 2014. Data integrity issues. We voluntarily suspend operations and say issues will be fixed in 4-6 months.
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Sept 2014 : FDA gave 6 observations on Indore facility. Management says it has less gravity than Ratlam. Approaching US FDA in January.
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Feb 2015 - Management claims WHO, EU had inspection of Ratlam and is confident of resolving issues.
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Jan 2015 - Import alert on Ratlam
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March 2015 - Import alert on Indore and Piparia.
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IPCA concall regarding impact of USFDA import alert - Management expects all facilities to be USFDA compliant before Dec 2015 - company has installed new hardware
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June 2015 - Quarters time needed to address issues.
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August 2015 - Received WHO certificate
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December 2015 - Approached US FDA for inspection. Not sure when FDA will inspect and clearance given.
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April, 2016 - Global funds stop sourcing from IPCA
In the latest 2015-16 annual report you say:
The Company is in the process of implementing comprehensive remedial measures at all its manufacturing sites to ensure quality
and regulatory compliances. These remedial measures included review of all processes and procedures, revamping of training
system, recruitment of senior quality personnel as well as automation of quality control laboratories. Your Company is committed
in resolving the regulatory challenges faced at the earliest. The Company is also committed to its philosophy of highest quality in
manufacturing, operations, systems, integrity and cGMP culture. Your management is confident that implementation of remedial
measures will ensure that the Company will regain all its regulatory approvals in due course of time.
In last years 2014-15 annual report you said:
The Company is implementing comprehensive remedial measures at all its manufacturing sites to ensure quality and regulatory
compliances. These remedial measures included review of all processes and procedures, revamping of training system,
recruitment of senior quality personnel as well as automation of quality control laboratories. Your Company is committed in
resolving these issues at the earliest. The Company is also committed to its philosophy of highest quality in manufacturing,
operations, systems, integrity and cGMP culture. Your management is confident that implementation of remedial measures will
ensure that the Company will regain all its regulatory approvals.
So we are still in the “process” of resolution. What have been doing for the past years.
Based on the above timelines, it is clear that you were overconfident that we would resolve the issues and you have been painting a rosy picture to the shareholders all along. You seem to have taken FDA comments lightly.
(1) So my questions is as a shareholder how long should I wait to see all the FDA issues getting resolved? Seeing your peers like Lupin resolving their issues so fast puts a big question mark on IPCA’s management. We had hired a consultant also for this.
(2) What employee changes have been made? Since one of your employer told US FDA- “if we find a failure, we set back the date/time setting and re-integrate to achieve passing results.” Looks like there was a whistleblower who sent mail also.
(3) Promoter confidence on IPCA - It is high time promoter show confidence by increasing their stake in the company. It was said in a news report that promoters have bought into a unit of Gammon India. Why not IPCA. Diversification is not an excuse.
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