Aurobindo slips 6% in a week after arm receives EIR from USFDA

Shares of Aurobindo Pharma edged lower for the fifth straight day, down 1 per cent to Rs 497.85 in Tuesday’s intra-day trade, after the company’s step-down subsidiary Aurolife received establishment inspection report (EIR) for its US plant in Raleigh, North Carolina from the United States Food and Drug Administration (USFDA).

Since announcement, the stock of this pharmaceutical company declined 6 per cent in the past one week, as compared to 4 per cent decline in the S&P BSE Sensex. It traded at its 52-week low level. Meanwhile, in the past six months, Aurobindo has underperformed the market by falling 31 per cent, as compared to a marginal 0.07 per cent decline in the S&P BSE Sensex.

“The plant at Raleigh, North Carolina, USA owned by Aurolife Pharma LLC, a wholly owned step-down subsidiary of the company, has received an EIR mentioning the inspection a voluntary action initiated (VAI) from the USFDA. With this, the USFDA pre-approval inspection and GMP inspection were concluded,” Aurobindo Pharma had said on September 22.

Aurobindo Pharma has three plants in the US under installation and commissioning - Dayton plant, Puerto Rico and Raleigh plant. Apart from that, in India, the company has the injectable Vizag plant, biosimilar and vaccine plant, then a plant in China is also under various stages of completion.

Aurobindo has business operations predominately in USA, Europe, and Growth Markets. The existing Growth Markets include South Africa, Brazil, Canada, and Africa. The company has presence in the anti-retroviral segment where it sells ARVs to over 125 countries by participating in global tenders floated by international organisations such as Global Fund, USAID/ PEPFAR and country-specific Ministry of Health (MOH).

The Company has 24 manufacturing facilities across the globe (21 in India, 1 each in Brazil, Puerto Rico and Portugal) and 9 R&D facilities. USA is the largest market for the company with around 47.4 per cent of the revenue generated in FY22. Meanwhile, Europe is the second largest market after USA accounting for around 27.6 per cent of revenues in FY22.

Analysts at ICICI Securities expect the Releigh plant to commercialised in FY23, with an EIR in place.

“Aurobindo is likely to commercialise all these seven plants over the next three to four years. The North Carolina plant has been earmarked for respiratory medication products, such as metered dosage inhalers (MDIs) and dry powder inhalers (DPIs) and Aurolife is working on five MDIs including one filed ANDA and two DPIs. With EIR in place for the facility, we expect the Releigh plant to be commercialised in FY23,” the brokerage firm said in a recent note.