The company said the action follows the earlier inspection of the site by the USFDA (United States Food and Drug Administration) agency in February 2019.
“The Company has received a warning letter dated June 20, 2019 from USFDA relating to our Unit XI, API manufacturing facility situated at Sy.No.61-66, IDA, Pydibhimavaram, Ranasthalam (Mandal), Srikakulam District, Andhra Pradesh,” Aurobindo Pharma said in a regulatory filing.
The company said it believes the existing business from this facility will not be impacted. It will be engaging with the regulator and are fully committed in resolving this issue at the earliest.
The stock has underperformed the market by falling 30 per cent from its recent high of Rs 830 on April 26. In comparison, the S&P BSE Sensex was up 1.4 per cent during the same period.
Aurobindo Pharma’s net debt jumped 43 per cent YoY to Rs 5,008 crore in March 2019. The increase was attributed to two acquisitions – Spectrum in the US and Apotex portfolio in Europe. The increase in working capital on account of higher inventory is intentional (to capture new business opportunities in the US).
“The stock has underperformed market on regulatory concerns related to three API/intermediate plants. We believe the concerns are misplaced as only 5-6 products (out of 100+ pending) are dependent on these plants. With high visibility on FY21E EPS of Rs 53.2 driven by the Sandoz acquisition,” analysts at HDFC Securities said in report dated May 29, 2019.
At 09:56 am, Aurobindo Pharma was trading 6 per cent lower at Rs 588 on the BSE, against a 0.53 per cent decline in the S&P BSE Sensex. The trading volumes on the counter doubled with a combined 2.91 million shares changing hands on the NSE and BSE so far.