Aurobindo Pharma stock tumbles after US FDA slaps warning letter to Eugia unit-III

The US market makes up 47 percent of Aurobindo Pharma's total sales.

Aurobindo Pharma shares slipped as much as 6.5 percent intraday on August 16 after the US Food and Drug Administration issued a warning letter to the drugmaker's unit-III of the formulations manufacturing facility of its arm Eugia Pharma Specialties.

Eugia Pharma is a wholly-owned subsidiary of Aurobindo Pharma.

At 10:52 am, shares of Aurobindo Pharma were trading at Rs 1,475.10 on the NSE, sharply off its day's low of Rs 1,421.45.

Back in May, the unit based in Pashamylaram had received an Official Action Indicated (OAI) status following observations from the US FDA. The US drug regulator issues warning letters to companies to that fail to address concerns about their practices, which can include poor manufacturing standards, issues with product claims, or incorrect instructions for use, pointed by the regulator as observations.

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An OAI status indicates that the US FDA inspection identified significant compliance issues that demand regulatory or administrative action.

To calm investor nerves, Aurobindo Pharma also stated in an exchange filing that this OAI status does not affect existing supplies to the US markets. Further, in an interaction with CNBC-TV18 earlier this week, the drugmaker's management remained confident of the company's arm Eugia clocking in sales of $600 million in FY25.

The management also stated that the remediation efforts for Eugia's Unit-II and Unit-III are progressing well.

The US market makes up 47 percent of Aurobindo Pharma's total sales. For the June quarter, US sales reached $426 million, slightly lower than the $432 million reported in the March quarter.

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