Analysts are warning that the financial outlook for Dr. Reddy's Laboratories ($RDY) could be harmed by ongoing problems and continued scrutiny by the U.S. Food and Drug Administration.
Bloomberg reported last week that the company's shares fell 15% in early November and fell another 8.5% last week after the federal agency posted online its warning letter that outlined quality control problems and problems with workers who compromised products that were supposed to be sterile.
Analysts have cut sales estimates for the fiscal year ending March 2017 by $75 million, Bloomberg reported.
"We feel that these are very grave observations, and this may take a little more than one year to resolve," Amey Chalke, an analyst at Motilal Oswal Securities in Mumbai told Bloomberg. "Previously our estimates were building for a one-year delay. Now we are expecting that this may take more of a two-year time frame."
The American oversight agency has banned imports from dozens of Indian plants in the last three years.
Dr. Reddy's has not been told to stop manufacturing or shipping products from its three plants named in the letter and the company told Bloomberg it is taking "various actions to raise the bar of our quality management system at an organization-wide level."
- here's the Bloomberg story