Why This Mid Cap Pharma Stock Is Falling After Letter From U.S. FDA

Shares of Natco Pharma were down on Tuesday after the United States Food and Drug Administration (USFDA) issued a warning letter to the firm about manufacturing violations at one of its facilities.

What Happened: Natco Pharma said it has received a warning letter from the FDA regarding its Kothur manufacturing facility.

The warning letter from the FDA does not impact the current supply of revenues from the facility, according to the company. However, it may result in delays or withholding of pending product approvals from the site.

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Why It Matters: An FDA warning letter typically points out violations such as poor manufacturing practices or inaccuracies in product claims or directions for use. The company is required to address these issues and provide a plan to the regulator within a specified timeframe.

Natco Pharma stated that it will respond to the warning letter within the given timeline and collaborate with the FDA to address the concerns comprehensively and promptly to ensure ongoing compliance.

In the third quarter of FY24, Natco Pharma reported a three-fold increase in net profit to ₹213 crore, driven by a revenue growth of over 54% year on year to nearly ₹759 crore. The company also raised its profit guidance, with a margin of 35%, supported by the increased share of its blockbuster cancer drug, Pomalidomide.

Price Action: Natco Pharma’s share price dropped 1.29% to ₹987 around noon on Tuesday.

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