Dr.Reddy’s Labs is down in the red today morning. Figuring among the top three losers on the BSE, the stock price slumped 9% to Rs.2115 levels, with intra day low currently at Rs.2110.
On 15th June, the stock price had surged after it announced that it had received the U.S. Food and Drug Administration (USFDA) for its Buprenorphine and Naloxone Sublingual Film. This drug is used to treat addiction to heroin and prescription painkillers.
And on Saturday, 14th July, the New Jersey district court granted a preliminary injunction against Dr Reddy’s – this means Dr.Reddy’s cannot sell this drug in the USA. The court has also ordered the parties to submit a final proposed injunction order on July 16th.
Dr. Reddy's Lab has said that it disagrees with the court's decision and will vigorously appeal against it.
This could take anywhere between 2-6 months for the matter to settle and is bound to adversely affect the company’s future earnings and most certainly the stock price. Nomura has said that this will impact 60% share for gSuboxone opportunity in price target. It has maintained a ‘buy’ with a price target of Rs.2704.