Biocon shares drop 6% after USFDA inspection of Malaysian unit

Shares of Biocon Ltd fell as much as 6% on Wednesday after Biocon Biologics' step-down subsidiary Biocon Sdn Bhd received a communication from the U.S. Food and Drug Administration (FDA) following the regulator's inspection at its insulin manufacturing facility in Johor, Malaysia.

The U.S. FDA has determined the inspection classification as 'OAI' (Official Action Indicated). The OAI classification by the US drug regulator means that regulatory or administrative actions will be recommended.

The OAI status may cause delay or withholding of pending product approvals or supplements from the facility, Biocon says in a stock exchange filing.

Reacting to the development, shares of Biocon slipped 5.6% to hit an intraday low of ₹240 apiece on the National Stock Exchange (NSE), taking the pharma company's market capitalisation to ₹28,900 crore. The stock opened at ₹251.50 against its previous closing price of ₹254.90. The drugmaker has declined 9% on a year-to-date basis and 10% over the past year.

"We submitted a comprehensive Corrective and Preventive Action (CAPA) plan to the FDA in response to observations from the July inspection and believe we are on track to complete all actions as committed," Biocon says in its regulatory filings.

"The company will continue to engage with the agency to understand any outstanding concerns and work closely to address them expeditiously. We do not believe that this will have a material impact on the manufacturing and distribution of the company's commercial products for the US market. Biocon Biologics remains committed to bringing high-quality and affordable medicines to patients in the United States," it says.

Biocon's contract research, development and manufacturing arm Syngene International too saw a steep fall in its share price. Shares of Syngene International tanked 7%, the biggest intraday drop since 2019, to hit a low of ₹720.30 apiece on the NSE.

The decline in share price comes after the company slashed its full-year growth guidance due to a "temporary slowdown in the U.S. biotech funding."

"We expect continued growth at a lower level in the second half of the year. Adjusting for this, against our previous guidance of high teens constant currency growth, we now expect the revenue to grow at mid-teens on constant currency basis," Syngene says in its second-quarter earnings statement.

In manufacturing services, the company says it continued to make good progress on the long-term biologics manufacturing partnership with Zoetis. "In manufacturing, we made good progress on our long-term biologics partnership with Zoetis, as well as commissioning a state of the art, digitally-enabled Quality Control laboratory to support our growing biologics operations. The acquisition of a multi-modal facility from Stelis Biopharma Ltd, announced last quarter, is progressing," says Jonathan Hunt, managing director and chief executive officer, Syngene International.