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Divis tanks 25% on fears of potential escalation of USFDA action

Equity Tips

Divis Laboratories on Friday said it is in the process of replying to the observations raised by USFDA, after the company lost a quarter of its market value at one point in the day, following reports of adverse observations from the USFDA made on its Vizag facility.

"Due process of reply to these observations requires Divi’s Laboratories to respond in detail and this is being done in time," the company said in a response to the clarification sought by the stock exchanges on the steep fall.

USFDA inspected the Unit-2 plant from November 29 to December 6 and issued a Form 483 with five observations pertaining to breaches in data integrity, improper controls and violations of current good manufacturing practices (cGMP).

"Divi’s is a relatively stable company with reasonably good track record of regulatory compliance," said Satish Kantheti, joint managing director at Hyderabad-based brokerage house Zen Securities.

"Markets these days are punishing stocks that have issues with regulatory compliance,"

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