Cipla Shares Slip Over 1% After FDA Suspends Patalganga Unit License

17 Aug 2023 , 12:00 PM

Following the Food and Drug Administration (FDA) Konkan division’s decision to suspend Cipla’s Patalganga production unit license for 10 days in December 2023 due to non-compliance with the 1940 Drugs and Cosmetics Act’s good manufacturing practices requirements, Cipla’s shares experienced a more than 1% drop in early trade on August 17.

The suspension order comes as a consequence of the facility’s failure to adhere to regulatory standards, impacting Cipla’s reputation and investor sentiment. Despite this setback, Cipla expressed disagreement with the FDA’s decision and the provided justifications, leading the company to initiate an appeal with the state government.

Despite the negative impact on stock prices, Cipla assured investors that the suspension will not significantly affect financial results or business operations, seeking to allay concerns. Furthermore, recent reports suggest that global private equity firm Blackstone has engaged in discussions to acquire the stake held by Cipla’s promoters, the Hamied family.

Although Cipla has labeled these speculations as market rumors, the anticipation of private equity involvement has propelled the pharmaceutical company’s stock price by nearly 20% over the past month.

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