Aurobindo unit gets 14 observations

The Asian Age.  | Ashwin J Punnen

Business, Companies

Given the sizeable number of observations, it has overshadowed the company’s decent September quarter numbers.

India pharma companies continued to be hit by warning letters from US Food and Drug Administration (US FDA).

Mumbai: India pharma companies continued to be hit by warning letters from US Food and Drug Administration (US FDA). Aurobindo Pharma Ltd is the latest casualty, having received a Form 483 with 14 observations for its injectable plant in Hyderabad, Aurobindo Pharma stock plunged 8.5 per cent on Thursday. Earlier three major Indian drugmakers — Cadila Healthcare Ltd., Glenmark Pharmaceuticals Ltd. and Lupin — received similar warning letters from the US health care watchdog in the last two months.

Aurobindo’s Unit IV, its general injectable formulation manufacturing facility in Pashamylaram, Hyderabad, underwent a US FDA inspection from 4-13 November, following which the drug regulator issued a Form 483 with observations to the unit.

Given the sizeable number of observations, it has overshadowed the company’s decent September quarter numbers.

Meanwhile, Aurobindo has said none of these observations was related to data integrity issues and that the company will respond to the US FDA within the stipulated timeline.

The unit contributes significantly to revenue and operating profit. Besides, this unit has around 47 pending filings, and about 30 per cent of overall filings, according to a brokerage report.

“According to our assessment, Unit IV accounted for around 9-10 per cent of US sales and 8-9 per cent of overall Ebitda in FY19. It accounts for around 50-60 per cent of total injectable sales of $213 mn in FY19, with the rest being from Unit XII, Eugia and Auronext facilities,” Emkay Global said in a note to its clients.

Meanwhile, Aurobindo reported better-than-expected second-quarter numbers. Sales surged 18 per cent year-on-year (YoY) in Q2FY19. This was largely led by the US market and Europe, which rose by 27.3 per cent and 21 per cent YoY respectively. Higher sales of existing products coupled with new launches were the main reasons for the strong overseas growth. Net profit also beat analysts’ estimates.

The markets have seemingly overlooked these numbers and chose to focus on larger US FDA issues, experts said. “While we remain positive on Aurobindo Pharma based on the limited price erosion in the base business and the robust ANDA pipeline, including complex generics, regulatory issues may remain an overhang over the near term,” said Motilal Oswal Financial Services in a note.

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