Ranbaxy downgraded on FDA concerns, shares fall

Ranbaxy Laboratories shares fell 1.3 per cent, adding to Monday’s 5.4 per cent slump after the US Food and Drug Administration raised concerns about manufacturing practices at one of its factories.

Macquarie and Jefferies downgrade Ranbaxy, saying the FDA uncertainty could put pressure on valuations in the near-term till further clarity emerges.

Macquarie downgraded the stock to “neutral” from “outperform” and cut the price target to Rs. 450 from Rs. 500, while Jefferies cuts Ranbaxy to “underperform” from “hold” with a price target of Rs. 350.

Ranbaxy said on Monday the FDA has filed “certain observations” about its Toansa pharmaceutical ingredients plant in the northern Indian state of Punjab.

“The issue also increases the risk of delay in resolution of import alerts and launch of products,” Jefferies said in a note to clients.