Why have the shares of Aurobindo Pharma fallen so sharply in the last few weeks?

Aurobindo Pharma stock slipped another 5% on Friday 14 January to touch a level of Rs.684.50. This fall came after the company announced that it had received a warning letter from the US Food and Drug Administration (USFDA) for its Unit I, an active pharmaceutical ingredient or API manufacturing facility located in Hyderabad. Warning letters are issued when the factory does not meet basic safety and hygiene standards of the FDA.

The stock is inching close to its 52-week low of Rs.620. Trading volumes were also sharply higher on Friday in the Aurobindo counter. The decision to issue a warning letter came after the inspection of the Unit by the USFDA in August 2021. The company expressed confidence that this warning letter would not impact the existing business from this facility. However, the impact will have to be seen in the coming days.