Aurobindo Pharma Shares Drop Most In 11 Years On U.S. FDA Observations
Capsules fall into a collection bin at a drug manufacturing plant in Goa (Photographer: Dhiraj Singh/Bloomberg)

Aurobindo Pharma Shares Drop Most In 11 Years On U.S. FDA Observations

Shares of Aurobindo Pharma Ltd. fell the most in 11 years after the U.S. Food and Drug Administration flagged lack of good manufacturing practices at the drugmaker’s plant in Telangana—a move that may cause disruption in supplies and delay in future approvals.

The stock tumbled as much as 20.64 percent—the steepest intraday decline since Oct. 8, 2008—to 450.35 apiece. It, however, pared some of the losses to end the day 19.16 percent lower at Rs 458.50 per share.

The closing price of the Aurobindo Pharma stock on Monday, Oct. 7, 2019. (Source: Bloomberg)
The closing price of the Aurobindo Pharma stock on Monday, Oct. 7, 2019. (Source: Bloomberg)

The U.S. FDA issued a Form 483, a kind of inspection report, with seven observations, including lack of documentation, equipment cleanliness and quality control. BloombergQuint has reviewed a copy of the Form 483. The regulator had inspected the company’s formulation unit-7 from Sept. 19-27.

Surajit Pal, pharma analyst at brokerage Prabhudas Lilladher Pvt. Ltd, said that the observations related to data integrity issues are “bad”. Over one-third of the U.S. sales come from this plant, Pal told BloombergQuint. This plant has also high number of pending approvals from the regulator.

Observations

  • There’s a failure to thoroughly review any unexplained discrepancy and the failure of a batch or any of its components to meet any of its specifications whether or not the batch has been already distributed.
  • There are no written procedures for production and process controls designed to assure that the drug products have identity, strength, quality, and purity they purport or are represented to possess.
  • Control procedures are not established which of those manufacturing processes that may be responsible for causing variability in the characteristics of in-process material and the drug product.
  • Laboratory records do not include complete data derived from all tests, examinations and assay necessary to assure compliance with established specifications and standards.
  • The responsibilities and procedures applicable to the quality control unit are not fully followed.
  • Equipment and utensils are not cleaned at appropriate intervals to prevent contamination that would alter the safety, identity, strength, quality or purity of the drug product.
  • Written production and process control procedures are not followed in the execution of production and process control functions.

The observations two, three and four are serious and, if escalated, could take time to comply for the company, Amit Rajan of Prosfora Technologies, that advises pharma firms on good manufacturing practices, told BloombergQuint.

Amey Chalke, pharma analyst at HDFC Securities, said the unit-7 is an important for Aurobindo Pharma considering there are more than 130 product approvals in place and over 30 are still pending with the U.S. FDA. The revenue contribution, according to Chalke, could be close to 25-30 percent to the U.S. Some of the observations may take some time to resolve, delaying the product approvals from the unit, he said.

(Corrects an earlier version to clarify that the Form 483 reviewed by BloombergQuint has yet to be uploaded on the U.S. FDA’s website)

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