It is just staggering to even think of the inertia displayed by the leadership today, when the stock was getting hammered…from 1600 plus, mere 48 hours ago to almost 1100,1/3rd fall,what were they doing? just numbed…that is all I can say…the lame duck response below, was numbing…how can a brand new plant, designed for US export, get 9 observations? why can’t they invest in a proper US consultant, given the stacks?? just numbing to even think about this…they say, ‘common sense is uncommon’ and in Wocky investor (like me), he has to get his head examined first,
“Inspection of our manufacturing unit at E-1/1, MIDC, Shendra, Aurangabad by US FDA has since been completed. US FDA has made 9 observations for which appropriate reply would be submitted to inspecting authority in due course.Further to inform you that Shendra manufacturing unit is a new facility and presently there are no supply of products from the said Unit to USA markets”.
Do we have a sense on what were the observations pertaining to?
Although this news could delay the recovery process, but in the longer run it would make Indian pharma companies even more quality conscious…
These days Cadila, Dr.Reddys , Sun Pharma, IPCA etc all are getting USFDA alerts/warnings does that mean that the entire pharma pack has cheated the system? Personally i am sure there would be some learning for the management after the previous alerts and it would be a good time to re-enter this story (maybe once a reversal pattern is observed)
Regards
Sreekanth
Disclosures: No holdings in Wockhardt for more than 6 months, re-evaluating entry…
There are some interesting posts on the Wockhardt disclosures on the Money Control Board. It seems management quoted ‘9 observations which are not serious in nature’ for the Shendra plant but ET Now did not report this line. I personally feel that the observations cannot be serious because management has a lot riding on getting approval for the Shendra plant. Besides, I am not sure but believe that the plant was approved by the British authorities. Hence, I believe there is a possibility that USFDA approval does come through later. I believe some insiders, perhaps even some members of the management, are playing around with the prices to profit from the volatility. Imagine the surge in price, if news comes that US FDA approval has come through.
This has been reported above already. Pl don’t use ‘another instance’ since this is THE recall
Disclosure : Not Invested/Never was and have not followed the company/story. I have NO interest either ways. No deep analysis just a quick web search and the first couple of hits. I my be completely wrong.
http://in.reuters.com/article/wockhardt-regulator-idINKCN0UT1FO
In a so-called ‘Form 483’ issued to the company after a recent inspection of the plant, the FDA listed nine concerns that Wockhardt said it would respond to in “due course.”
It did not disclose what the FDA’s concerns were, and a company spokesman did not respond to requests for comment through the day.
The United States once contributed a majority of Wockhardt’s revenue, but now makes up only about 19 percent, as the FDA banned imports from two of its key drug plants over manufacturing quality concerns over the last three years. Those plants are yet to be cleared by the FDA.
Now a company that has 2 of its key plants banned for around 3 years and has yet to get them cleared does not inspire confidence. The management does not disclose the details of the FDA’s concerns. The latest FDA’s warnings may be trivial but the managements past record does not inspire confidence.
Again, my reading of the situation my be completely wrong. Do your own research.
Dear Pankaj,
Thanks for your PoV. Now lemme share contrarian view here. If currently, US exports contribute only 19% of total sales, does FDA’s 9 point observation be viewed so negatively as reflected in price? My view is to take worst case scenario and calculate NPV from there and build positions if price seem to be lower than projected worst case growth.However I understand that shit happens and with previous mistakes of management, it has decent probability of happening again.
Disc: Not invested however considering entering if correction continues.
I am duplicating an earlier reported link here again (apologies but it is relevant for the context)
http://articles.economictimes.indiatimes.com/2016-01-09/news/69634783_1_wck-chairman-habil-khorakiwala-wockhardt
This is what drew me to the stock but apparently, there is more to it than what meets the eye. Given all these positive news and the so called UK approval, I assumed that the good old ‘urine episode’ is behind them but alas no.
I had lived through 2 such FDA issues - once in IPCA and recently in Cadilla. In both cases, I decided to move out since I did not have the nerve to keep wondering, when it will be approved again. Hiteshbhai of course has recounted many an instance in other threads esp old Aurobindo and DRL swings, when these issues cropped up. Here, I assumed that a grand new plant designed specifically for exports would have avoided the obvious pitfalls esp from lessons learnt in prior inspections. Khorakiwala had also been making the right noises of how these inspections make them stronger etc…but nothing seems to have changed. Forget confirming, why not they at the minimum send a clarification on what these issues and what the impact is…
PS - invested at higher levels and wondering what to do. Booking loss is not an option
I too saw a similar report and had decided to dig further but promptly forgot all about it. Your’s is a tough position.
While valuations might seem tempting (and I don’t know having done no research myself), I will wait for the results of the inspection of 2 plants carried out in May last year. Perhaps a clean chit in both will signal a reversal of fortune.
All I wanted to convey by my first post was that I will not jump to any conclusion but wait for clear evidence of a reversal. I do understand that by then there may not be any bargain left.
This is a speculative and volatile stock and these kind of cracks are nothing new . so a little surprised about the panic and frustration in some of the preceding posts. if you have invested in this counter you should brace yourself for wild moves .
in the past year or so, almost all the plants of the company have been inspected by fda and after every major inspection there has been a vicious cut as any outcome short of immediate resumption of
US exports is unacceptable to the market.its a bluechip company which behaves like a penny stock thanks to the constant news flow! :). Till the US business is restored to normalcy stock will stay in the grips of speculative operators .
Now having said that lets try to get some facts down on the various plants and their compliance status :
Waluj & chikalthana - the major moneyspinners which were primary contributors to US revenues before the import alert. FDA Inspections here in early 2015 led to 3-4 observations . As per management these were not critical and the major concern of FDA was mostly related to the product batches already in the market which were supplied before import alerts . Management had launched a massive recall for this back in april 2015 as a response. Hence the flurry of product recall news articles .UK MHRA has already lifted their ban on these plants and company has resumed supplies to UK which is a major market.
Morton Grove : This is the only plant right now which supplies to US market . Inspection in mid 2014 led to major observations similar to waluj but management was able to address those and FDA gave a all clear with in six months. I think because the plant is in USA, this led to a faster turnaround time from USFDA.
Baddi: Cleared by FDA with no 483s in June 2015 . Not much contribution to US revenues
Ankaleshwar - Again small plant . Inspection in December led to four 483s. Not sure of the current status.
Shendra - Spanking new plant , 483 with 9 observations . Though this is disappointing development ,if i recall correctly , USFDA had said they wont be inspecting this plant till the existing plants in Chikalthana and waluj got thier approval.
So the fact that they would be inspecting shendra itself could be positive . On the observations themselves , i will wait for management’s comments on their nature and seriousness before taking a call .
additionally ,Trouble with exports has led wockhardt to seriously focus on the domestic market .This has started reflecting in the awacs numbers ,after listless performance company has been consistently growing in excess of 25% for past few quarters .
R&D spending at 13% continues to be high.
Disclosure : Invested for last one year and positively biased . Wont mind adding at 15-20% cracks like yesterday.
Hi
Just two bits from my side…Wockhardt, Strides Shasun and Sequent Scientific… All went down around the same time… Look at the shareholding pattern data of public shareholders… One common name amongst the three.
There is a rumor that a certain trader M from Mumbai got caught in this mess and had thrown the stock into F &O ban.
Hindsight is always 6/6.
Look at Anirudh Sethi tweets on 14th. They were pointing to a sell off by insiders… Big bear…
shocking indeed. I did not know this Anirudh …just went thro is tweets of 14th… he seemed to have had the pulse…The Shendra observations news was known and they seem to have held it and then went selling with vengence…perhaps made full use of F&O too…That explains the timing gap between the recall and Shendra news…what a joke, the so called insiders made out of fools like me?
As per some news report, there is Wockhardt Concall today at 10.30am. It mentions some UK MHRA inspection done at one its plant in November 15. Remember as of now, UK is the biggest export for Wockhardt. Any bad news on that would be catastrophic. Let’s hope that Mr. Khorakiwala comes clean about Shendra and also Waluj and Chikhalthana.
do u hv the concall numbers?
Please watch ET Now. Call is on 10.30am.
Mr. Khorakiwala came on concall today. He mentioned none of 15 observations were critical. Half of them would get resolved in 15 days. Rest would get resolved in next 2 months. Shendra plant is currently supplying to UK and Ireland. Shendra is UK MHRA approved. He also mentioned that they will be in discussions with US FDA for other plants approval.
Thx for the prompt update