Marksans stock dips deep, blames it on unverified media reports

Mumbai headquartered pharma company Marksans Pharma slumped 20 per cent on stock exchanges on Wednesday, reacting to certain media reports that company's Goa plant failed UK in drug regulator's inspection.

According to media reports Marksans Goa plant received a notice of deficiency, from the UK Medicines and Healthcare products Regulatory Agency (UK MHRA) for Goods Manufacturing Practices (GMP) norms. The UK MHRA is said to have detected violations following the norms.

In this connection, Marksans clarified the news  by saying that it did not receive any notice from the regulator. UK MHRA had conducted a GMP inspection of the company's plant at Goa, in the month of November 2015. After the inspection, UK MHRA has issued certain observations, to which company has responded. Marksans is awaiting future response from UK MHRA in this matter as on date. Company's Goa plant is functioning normally and the shipments to UK are following business as usual.

Reacting to the reports, the scrip slumped 20 per cent to hit a low of Rs 75.80 on the BSE as 99 per cent revenue of company comes from Exports in which the whole Europe drug market contributes to around 62 per cent. So a notice of violation from one of the regulators could have reduced the revenue by a substantial amount.

Even Wockhardt had received a similar warning for one of its manufacturing facilities in 2013 and 2014, which saw the stock plunge more than 20 per cent as investors panicked and sold their positions. The stock stabilised from its lows and gradually started recovering after clarifications were made.

We advise to Hold onto the stock for the moment, as company has already clarified the doubts. Investors should let the stock stabilise at this point of time and not take any hasty decisions both on the ‘Buy’ and ‘Sell’ direction.