The fear of US Food and Drug Administration (US FDA) warning on quality issues spreading to other manufacturing units of Wockhardt has seen the scrip nearly halve in nine trading sessions.

From an intra-day high of Rs 1,026.8 a share on July 16, the scrip on July 26 closed at Rs 574.35 on the NSE. The traded volume for this period was over 1.09 crore shares. On the BSE, the scrip fell from Rs 1,025.7 to Rs 574.5 with trading volume of over 44.78 lakh shares during this period.

Macquarie downgrades

A Macquarie report downgraded the scrip from ‘outperform’ to ‘neutral’ on the premise that “multiples could be under pressure in the near- to medium-term, driven by uncertainty around remediation timelines and future approvals”.

Traders said there was no need for such knee-jerk reaction on the stock as this news was already in the public domain since May.

“The management had made it clear that the negative impact of this US FDA action would be about Rs 550 crore a year and that of the UK regulator Rs 13.6 crore,” said a pharma analyst from an Indian brokerage.

“So, there was no need to go short suddenly, and it appears someone wants to accumulate Wockhardt, albeit at lower prices. It would take at least two years for the company to come out of this,” she added.

The US FDA had said: “We highly recommend that you hire a third-party auditor, with experience in detecting data integrity problems, to assist you with this evaluation and to assist with your overall compliance with CGMP (Current Good Manufacturing Practice). It is your responsibility to ensure that data generated during operations is accurate and that the results reported are a true representation of the quality of your drug products.”

The company has reportedly appointed Lachman Consultants for conducting third-party audit.

raghavendrarao.k@thehindu.co.in

(This article was published on July 26, 2013)
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