Brokerages downgrade Ranbaxy over US FDA concerns

Brokerages downgrade Ranbaxy over US FDA concerns

Brokerages Macquarie and Jefferies downgraded pharmaceuticals giant Ranbaxy Laboratories Ltd after U. S. Food & Drug Administration (FDA) raised its concerns over manufacturing practices at one of the company's factories.

The two brokerages downgraded Ranbaxy saying the U. S. regulator's warning letter could put pressure on the valuations of the company in the near-term future.

While Macquarie downgraded Ranbaxy's stock to from "outperform" to "neutral," Jefferies slashed its rating for the stock from "hold" to "underperform." Macquarie slashed the price target from Rs 500 apiece to Rs 450 apiece, while Jefferies brought it down Rs 350 apiece.

The brokerages downgraded Ranbaxy after the company confirmed that the FDA had slapped it with Form 483s with certain observations for alleged irregularities in manufacturing practices at its Toansa plant.

The company said in a filing with the BSE, "On January 11, 2014, Ranbaxy received the form 483 with certain observations as a result of the recent US FDA inspection at its active pharmaceutical ingredient (API) plant at Toansa, Punjab, India."

The brokerages said the issue could increase the risk of delay in resolution of import alerts and launch of new products

After suffering a loss of more than 5 per cent in its market value on Monday, Ranbaxy stock slipped over 2 per cent to around 429 apiece on Tuesday.

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