Cipla shares extend losses to nearly 5% after USFDA discloses observations on key partner

Shares of Cipla Ltd

. have extended their losses to nearly 5% on Wednesday, January 7, after the US Food and Drug Administration (FDA) released details of its observations on Pharmathen International.

Cipla has a partnership with Pharmathen, a Greece-based contract manufacturing organisation, to commercialise tumour drug Lanreotide in the US market, and the regulatory action has weighed on investor sentiment.

According to the US FDA, the observations point to multiple compliance gaps at Pharmathen's facilities.

These include inadequate procedures to prevent contamination and weak control systems to ensure sterile conditions. The regulator also flagged deficiencies in aseptic processing areas and shortcomings in laboratory controls, including the absence of appropriate procedures.

The FDA further said failures in establishing adequate processes to ensure the purity and quality of drug products, along with lapses in following approved sampling plans and testing procedures.

In addition, the buildings used for manufacturing were found to be in poor condition.

Brokerage firm Nuvama wrote in its note that Pharmathen is Cipla's CMO partner for Lanreotide, based on Cipla's label on the drug, and that any major manufacturing challenge will have an impact on Cipla's Lanreotide revenue.

The brokerage added that it will have to assess whether Cipla has any alternate manufacturing arrangement.

CNBC-TV18 has reached out to Cipla and is awaiting a comment.

Shares of Cipla are now at the lows of the day, currently trading 4.5% lower at ₹1,462.9. The stock is now down 2.5% over the last 12 months.