Aurobindo Pharma soars 19% as Unit IV receives EIR with VAI status from FDA

Shares of Aurobindo Pharma surged 19 per cent to Rs 594 on the BSE in early morning deal on Wednesday after the company’s Unit IV received Establishment Inspection Report (EIR) with Voluntary Action Initiated (VAl) status from the US health regulator.

At 09:21 am, the stock was trading 13 per cent higher at Rs 563, as compared to 0.87 per cent rise in the S&P BSE Sensex. A combined 4.58 million shares changed hands on the counter in the first six minutes of trade on the NSE and BSE.

“The Company has received the Establishment Inspection Report (EIR) with Voluntary Action Initiated (VAl) status from the US Food & Drug Administration (USFDA) for Unit IV,” Aurobindo Pharma said in an exchange filing today.

The USFDA had inspected Company's Unit IV, a general injectable formulation manufacturing facility situated at Pashamylaram, Hyderabad, from 4th to 13th November 2019. At the end of the inspection, the company had issued a 'Form 483' with 14 observations.

On November 13, 2019, Aurobindo Pharma had informed the stock exchanges that it believed that none of these observations are related to data integrity issues.

Currently, Unit 4 has 15 abbreviated new drug applications (ANDA) approvals pending over next one year.

“Aurobindo Pharma remains focused on US generics, on the back of a strong ANDA pipeline with good mix of complex generics. The company is also in the process of integrating Apotex and hopes to derive further synergies from it for its Europe business,” analysts at Motilal Oswal Securities said in Q3FY20 result update.

“Based on integration of the Sandoz business and increasing market share for already commercialized products, we expect 15 per cent CAGR in earnings over FY19-22E. We value Aurobindo Pharma at 9x12-month forward earnings to arrive at price target of Rs 645,” it added.