Why This Pharma Giant's Shares Are Down Under Regulatory Pressure

Drugmaker Cipla’s shares went down more than 1% in early trade on Thursday after the license of one of its manufacturing plants was suspended by the U.S. Food and Drugs Administration (FDA).

What Happened: The Konkan division of the FDA ordered the suspension of the license for the company’s Patalganga manufacturing unit for 10 days in December 2023 due to the facility’s non-compliance with good manufacturing practices under the Drugs and Cosmetics Act of 1940.

Cipla said it disagreed with the FDA’s ruling and the rationale behind the suspension. Consequently, the pharmaceutical firm intends to appeal the order to the state government. Cipla reassured investors that the suspension would not significantly impact its financials, operations, or other activities.

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Cipla has been in the spotlight due to reports of discussions for the acquisition of a stake by the world’s largest private equity fund, Blackstone, from the company’s promoters, the Hameid family. Although the Indian firm has dismissed these reports as market speculation, the prospect of private equity investors acquiring Cipla’s shares has piqued investor interest.

Price Action: Cipla’s share price shed 1.07% to trade at ₹1,230.20 in the early part of the session on Thursday.

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