The impact of IPCA Labs’s voluntary suspension of shipments of API for the US from its Ratlam facility will depend on how fast it comes out of the suspension.

However, while FY2015 sales would be impacted, the 2016 FY numbers would remain intact, according to Sarabjit Kour Nangra, VP-Research (Pharma), Angel Broking, Mumbai.

In her analysis of the impact of the company’s decision to suspend shipments from its Ratlam facility following USFDA observations, she said Form 483 did not imply a withdrawal from the market. But as IPCA Labs had voluntarily withdrawn the products, it could impact a part of its API and formulations business in the US. She said as of FY2014 the US accounted for sale of Rs 419.6 crore, constituting 12 per cent of total sales and 20 per cent of its exports. The formulations: API mix was around 61:39.

IPCA has an API unit at Baroda that is USFDA approved. She felt the net impact of the decision on the company was dependent on the time it took to come out of it. IPCA would have 15 days to respond to USFDA’s observations, with a time frame to resolve the issues.

Nangra said the other option for IPCA Labs was to shift the business to Baroda, where it has a USFDA approved facility. While she expected the decision to impact IPCA Lab’s FY2015 sales, she said FY2016 sales “should remain intact”.

While reducing sales and net profit by 4 per cent for FY2015, she maintained FY2016 numbers and the buy rating with a price target of Rs 1,046 for IPCA Labs stock.

Shares of IPCA Labs continue to be under pressure, shedding Rs 72.95 or 8.71 per cent, to trade at Rs 764.90 on the NSE with a trading volume of 17.80 lakh shares.

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