Caraco claims sound financial position, but FDA action will harm performance

Caraco issued a statement on Friday, clarifying its financial position after the FDA raid on its facilities. The company said that the inventory that has been seized by the regulator has a value of about $15-$20mn. It does not affect products sold by Caraco under third-party distribution agreements (such as with Sun Pharmaceutical Industries, its Indian parent company) and also products sold under the Caraco brand, but made by other companies. The company claims that the profits generated from these products will be enough to cover its expenses. It also has a cash balance of $64mn which includes a loan of $18mn. It thus believes it has enough time to resolve the deficiencies detected by the FDA. Earlier, in a statement Caraco said that the FDA’s actions may have a material adverse impact on near term operations.