Granules India Ltd.’s shares fell 10% on Tuesday after the USFDA granted an Official Action Indicated (OAI) status to its crucial Gagillapur facility, which had earlier received a form 483 with six observations.
An Official Action Indicated or OAI status means that a facility has objectionable conditions or practices that require regulatory or administrative action.
“This Granules facility manufactures huge volumes of highly commoditised products like ibuprofen, metformin, acetaminophen, fexofenadine, gabapentin, metoprolol etc. and any major disruption here will create more supply challenges in the US as quick capacity ramp up in such products is going to be difficult,” brokerage firm Investec wrote in its note.
Investec analysed Granules’ on-market US product portfolio and saw companies that have product overlap with Granules. It said that based on its June quarter disclosures, the US formulations sales for Granules are in excess of $250 million and most of those are likely to be from the Gagillapur unit, if not all.
So which are the companies that have products overlapping with Granules? Investec has analysed products with exports of over $3 million per year and nearly 50% of overall SKUs.
Aurobindo Pharma
Investec believes that Aurobindo Pharma has the most products overlapping with granules, including acetaminophen, ER metformin, ibuprofen, fexofenadine, and guaifenesin ER. Aurobindo has approved ANDAs in place for two-thirds of Granules’ and covers 90% of the exports.
The company also commissioned a dedicated granulating capacity and can gain business as Granules also manufactures Pharmaceutical Formulation Intermediate at this unit, Investec wrote.
Marksans Pharma
Out of the analysed SKUs, Marksans has approved ANDAs for nearly 45% of the SKUs and covers 50% of the analysed exports. Key products of overlap here acetaminophen ER, fexofenadine, guafenesin ER.
Dr. Reddy’s Laboratories
Based on Investec’s analysis of SKUs, Dr Reddy’s has approved ANDAs for nearly 50% of those and covers 35% of analysed exports. The key products of overlap include meto succinate ER, fexofenadine, guafenesin ER, metformin and ibuprofen.
Among the other companies, Sun Pharma, Zydus and Alkem have product overlaps in the form of approved ANDAs with Granules’ analysed product portfolio for the US.
After the 10% fall on Tuesday, shares of Granules India have entered the F&O ban, which means no new positions can be created in the stock.
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