Dr Reddy's Labs plunges after US regulator issues three observations for company's Bachupally unit

Reddy's Laboratories Ltd (DRREDDY) shares tumbled on Monday after the company received three observations from the US Food and Drug Administration (FDA) for its research and development (R&D) unit located in Bachupally, Hyderabad. The drug maker's stock fell by as much as Rs 391.8, or 6.8 per cent, to Rs 5,371.8 apiece on BSE. 

The US drug regulator conducted a pre-approval good manufacturing practices (GMP) inspection at the Hyderabad-based pharmaceutical company from December 4 to December 8, according to a regulatory filing. 

"We have been issued a Form 483 with three observations, which we will address within the stipulated timeline," Dr Reddy's Labs said on Friday after the completion of the inspection by the FDA. 

The fresh issues raised by the FDA mean more trouble for the Indian drug maker following 10 observations made by the regulator at the company's formulation manufacturing unit in the same location. 

In October, the US drug regulator had made 10 observations at the company's formulation manufacturing facility in Bahupally after carrying out an inspection from October 10 to October 27.  

According to Zee Business research, details of the 10 issues raised by the US Food and Drug Administration about the Bachupally unit of Dr Reddy's are serious and could prompt the US health regulator to issue a warning letter to the company. The issues raised by the regulator include microbial contamination, data integrity and market complaints, the Zee Business analysts pointed out. 

Dr Reddy's Labs manufactures more than 100 products at the Bachuplly unit, which accounts for 30 per cent of the company's overall revenue from the US market, according to brokerages.  

Four out of the company's top 10 products are manufactured at the facility, according to Zee Business research. 

(This story will be updated shortly)

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