Shares of Lupin fell in morning trade on March 31 after the US Food and Drug Administration issued Form 483 containing ten observations on the company’s Pithampur unit.

This comes a few months after the company received Form-483 and its eight observations at its manufacturing facility in Mandideep. Previously, the company received a Form 483 containing five observations at its Nagpur unit, which manufactures injectables.

The FDA issues Form 483 when a facility fails to comply with drug regulatory agency manufacturing practices. In recent quarters, domestic pharmaceutical companies have faced pressure from the USFDA to step up regulatory scrutiny after post-COVID physical examinations began. USFDA approval plays a crucial role for Indian pharmaceutical companies as sales in the US market account for a significant portion of these drugmakers’ revenues.

Shares of Lupin were trading at Rs 640 on the NSE at 9:59 am, down 1.9% from the previous close. The stock is also down about 13% so far in 2023.

Lupin’s Pithampur plant is also significant to the company as it plans to manufacture the generic version of Spiriva at the facility. Spiriva is a prescription medicine that is used long-term to improve breathing in people with certain respiratory conditions. It faces limited competition in the US and is a high-margin product, so Wall Street analysts expect its launch to support Lupine’s financials in the coming quarters.

However, Lupin’s plan to launch the drug in the fourth quarter has also been delayed due to regulatory hurdles. Stakeholders are also confused about the actual impact of the Spiriva launch, as the current observation is for the Unit 2 facility in Pithampur, while Unit 3 is scheduled to produce Spiriva.

Global research and brokerage firm Nomura expects investor sentiment on Lupin to remain high as the company receives more observations. Six observations were also issued for the same facility in January 2019.

Another brokerage, ICICDirect, believes that the likelihood of receiving a warning letter from the USFDA for the Pithampur unit is also high as the facility has been under Official Action Instruction (OAI) status since April 2019.