Shares of Dr Reddy's Laboratories plunged as much as 8 percent to Rs 2,352 on Wednesday amid concerns the drugmaker’s plan to launch a generic version of a female contraceptive in the US may face a delay.
The company said it has received a complete response letter from the US Food and Drug Administration (USFDA) for its version of NuvaRing— a small, flexible vaginal ring used to prevent pregnancy. While Dr Reddy's said it is preparing a response to the drug regulator’s letter, it did not give much clarity on how much time it would take.
According to brokerage Citi, Nuvaring launch is unlikely to happen before mid CY20 and further delay can’t be ruled out. Citi has cut Dr Reddy's FY20 EPS estimates by 8 percent. It maintained 'sell' rating on the stock but cut the price target to Rs 2,375 per share from Rs 2,540 earlier.
Mirroring the concerns, the stock was trading 6 percent lower at Rs 2,405.55 at 9:45 AM on the Bombay Stock Exchange. In comparison, the benchmark Sensex index was down 0.3 percent at 37,058.
In the quarter ended June 30, Dr Reddy's Laboratories reported a 45 percent (YoY) rise in its net profit at Rs 662.8 crore led by a one-time gain. Revenues grew 3 percent YoY at Rs 3,843.4 crore.