Divis Laboratories down in the doldrums: tanks 26 % post US FDA observations

Stocks of Divis Laboratories nosedived more than 26 per cent intra-day, owing to media reports of company receiving adverse observation from the US watchdog on Vizag facility of the company.

The observation made by the regulator pertains to integrity, improper controls, and violations of current goods manufacturing practices (cGMP). Inspection by the USFDA was carried out from November 29 to December 6 and subsequently a Form 483 with five observations was issued, which are particularly of major concern and complex in nature.

As per brokerage firm, Emkay, the USFDA observations include proper controls not being exercised over computer systems; facilities and equipment not maintained to ensure purity, quality and strength; while R&D division's guides' quality and production activities were inconsistent with CGMP; failure to conduct proper probe with respect to complaints; and documentation and records not being maintained properly.

These scathing remarks made by the regulator didn’t go down well with the investors and analysts, which was reflected in the knee jerk reaction in the form of stock price movement that tumbled by 25 per cent in absolute terms, losing more than 220 points.

Stock was trading at Rs 842.45, down 24 per cent on NSE at the time of filing this report.