Aurobindo Pharma tumbles after USFDA classifies oral solids plant as OAI

The US drug regulator classified the inspection of Aurobindo Pharma's Unit 7 facility as Official Action Indicated (OAI).

The United States Food and Drug Administration (USFDA) conducted a cGMP inspection at Aurobindo Pharma's Unit 7 (oral solids formulation manufacturing facility) from 19th to 27th September 2019. The inspection ended with 7 observations.

Aurobindo Pharma on Thursday announced that it received a letter from the United States Food and Drug Administration (USFDA) classifying the inspection conducted at Unit 7 facility as OAI.

OAI means "objectionable conditions were found and regulatory administrative sanctions by FDA are indicated" during inspections.

The company clarified that it believes that this OAI classification will not have any material impact on the existing revenues or the supplies to its US business at this juncture. The company said it will work closely with the regulator to comprehensively address the issues.

Following the announcement, shares of Aurobindo Pharma dropped 5.10% to Rs 481.45. It hit a high of Rs 509.10 and a low of Rs 466.75 in intraday so far.

The stock rose 3.47% in the past one month. On the technical front, the stock's RSI (relative strength index) stood at 50.512. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock was trading between its 50-day moving average (DMA) placed at Rs 462.75 and 100-day moving average (DMA) placed at Rs 491.38.

On a consolidated basis, Aurobindo Pharma's net profit rose 2.7% to Rs 649.31 crore on a 18.2% surge in net sales to Rs 5,518.27 crore in Q3 December 2019 over Q3 December 2018.

Aurobindo Pharma engages in developing, manufacturing and marketing active pharmaceutical ingredients (APIs also referred as bulk actives), intermediates and generic formulations. The company's robust product portfolio is spread over 6 major product areas encompassing with around 65 APIs in the non-antibiotics and over 55 APIs in the antibiotic segment and the World Health Organization (WHO), Geneva, has also approved Aurobindo's products.

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