Shares of Cipla Ltd., a major player in the pharmaceutical sector, surged in Thursday’s trading session after the U.S. Food and Drug Administration (FDA) awarded its Goa manufacturing facility a “Voluntary Action Indicated (VAI)” status. This news sent Cipla’s stock up by 9.88%, reaching an intraday high of ₹1,557.45 on the Bombay Stock Exchange (BSE), and by 10:41 a.m., shares were still up 8.24% at ₹1,534.25.
In a filing, Cipla stated that, following an inspection in June, the FDA issued the VAI status on October 30, 2024. This status, while indicating certain observations during the inspection, confirms that immediate corrective actions are not necessary.
What the VAI Status Means for Cipla
The FDA’s VAI designation is a significant positive for Cipla, as it clears the path for continued production without requiring immediate changes to operations. This reassurance is a relief for the company, as it signals that the issues identified are minor and will not delay the company’s U.S. approvals or operations.
With the regulatory green light, Cipla can move forward with key U.S. product launches, including a high-potential generic version of Abraxane, a chemotherapy drug used in oncology. Launching this product in the U.S. could considerably boost Cipla’s revenue and expand its footprint in the oncology sector.
The VAI status also supports Cipla’s broader U.S. market pipeline, allowing it to pursue a steady stream of product filings and approvals in the world’s largest pharmaceutical market. Cipla’s Goa facility, which produces both oral and injectable medications, is well-positioned to support this growth.
Market Reaction and Stock Performance
Cipla’s stock response to the VAI announcement has been strong, as investors see this status as a sign of regulatory confidence. Shares gained nearly 10% following the news, highlighting the market’s positive outlook for Cipla’s upcoming U.S. product launches and continued operations.
From a technical perspective, Cipla’s stock is trading above its 5-day, 10-day, 150-day, and 200-day simple moving averages (SMAs), although it remains below the 20-day, 30-day, 50-day, and 100-day SMAs. Its 14-day relative strength index (RSI) stands at 45.75, indicating a neutral position, as values below 30 suggest oversold conditions and above 70 are considered overbought.
On a valuation basis, Cipla has a price-to-equity (P/E) ratio of 26.09 and a price-to-book (P/B) value of 4.09. Earnings per share (EPS) are at ₹54.32, with a return on equity (RoE) of 15.68, according to BSE data.
Overall, Cipla’s VAI status has set the stage for strong potential growth in the U.S., which is expected to support its performance in the coming quarters.
