Cipla's Indore unit gets warning letter from USFDA, new approvals to be put on hold

The letter also contains directional guidance for necessary corrections. Cipla will respond to the USFDA within the stipulated time to ensure sustained compliance, the company said.

Cipla was issued eight observations by the US drug regulator for the inspection carried out earlier this year. In August, the facility was classified as Official Action Indicated (OAI).

Going by the US drug regulator’s classification, Official Action Indicated (OAI) generally means objectionable conditions were found and regulatory or administrative actions by USFDA are indicated during inspections.

This also means that new approvals from the site will be put on hold for now. The delay in Cipla's inhaler gAdvair is already factored into the consensus estimates and the stock price.

The company is already working on transferring the Advair generic to another site and is likely to be launched by early to mid-financial year 2025.

Cipla has also been in the news for a potential stake sale from its promoters. However, that appears to have reached an impasse after CEO Umang Vohra, in an exclusive interaction with CNBC-TV18 last week called the reports "speculative."

"The company doesn't comment on it, the promoters have not commented on it. We respond to what we do as a company through various statutory announcements, there have been none. As of two days back, we also opened the window for our employees. So I think people could infer, based on all of this, seems like it's business as usual," he said.

Highlighting Cipla as one of its top picks for Samvat 2080, brokerage firm Motilal Oswal had written that the company's robust ANDA pipeline with complex products should drive consistent growth in the US generics segment.

This, along with a steady outperformance in the branded generics market would enable 19% earnings CAGR over financial year 2023 - 2025.

The brokerage expects a potential upside of 21% over the next 12 months for Cipla's shares.

Shares of Cipla ended 1% higher on Friday and have gained 17% so far in 2023.