Auro Pharma slides as arm's Telangana facility gets 9 USFDA observations

Aurobindo Pharma declined 1.13% to Rs 1,054.30 after the US drug regulator issued nine observations post inspection at Telangana manufacturing facility of Eugia Pharma Specialities, a wholly owned subsidiary of the company.

The United States Food and Drug Administration (USFDA) inspected Unit-III, a formulation manufacturing facility, situated at Pashamylaram, Patancheru Mandal, Sangareddy District, Telangana, from 22 January to 2 February 2024.

The drug maker said that it will be responding to these observations within the stipulated time. It has decided to temporarily stop manufacturing on certain lines to conduct holistic investigation and corresponding partial distribution thereto.

The company has already started working with the regulatory authority / third party consultants to accelerate the process and re-start production on those lines at the earliest. At this point in time, Auro Pharma dont foresee any material impact on the business.

Meamwhile, Eugia US Manufacturing LLC, USA, a wholly owned step-down subsidiary of the company has entered into an asset purchase agreement with Empower Clinic Services New Jersey, LLC to dispose of its business assets as a going concern with related assets and liabilities and employees.

The transaction is expected to be completed within 90 days from the date of definitive agreement, subject to fulfilment of closing conditions referenced in the definitive agreement including financial closure by the buyer.

The cash consideration of $52 million will be received from the disposal, plus $58 million in lease payments made to Eugia US Manufacturing LLC and/or its affiliates, over the 20 years lease term including extensions.

Aurobindo Pharma is a vertically integrated pharmaceutical company that manufactures and markets generic pharmaceuticals and active pharmaceutical ingredients (APIs).

The companys consolidated net profit jumped 84.92% to Rs 757.18 crore on 26.03% increase in total income to Rs 7,150.71 crore in Q2 FY24 over Q2 FY23.

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