Aurobindo Pharma receives Sebi's warning letter over ongoing USFDA audit

Aurobindo Pharma Ltd on Monday said it has received a warning letter from capital markets regulator Sebi for non-disclosure of details related to an ongoing audit of one of its manufacturing units in Hyderabad and observations made by the US Food and Drug Administration (USFDA).

The letter is in regards to certain disclosures made by the company on the ongoing USFDA audit of company's Unit-1 and observations made by the USFDA between the period 2019 to 2022, Aurobindo Pharma Ltd (APL) said in a regulatory filing.

The Sebi warning letter observes that the company had "disclosed very limited and restricted information" and it did not disclose the detailed reasons and also did not consider the observations of USFDA as serious, it added.

The Sebi letter sent to the company on June 24, 2022 pertains to disclosures made by APL related to Official Action Indicated (OAI) and warning letter issued to it by the USFDA following inspection carried out in August 2021 on the Unit I, an API (active pharmaceutical ingredients) manufacturing facility in Hyderabad.

On November 10, 2021, the company had announced that the USFDA had classified the inspection conducted at its Unit I between August 2 to August 12, 2021 as OAI but it would not affect the continuing commercial supplies to the US market from this facility, the Sebi letter said.

Subsequently, on January 14, 2022, APL disclosed that with regard to OAI classification of Unit I, the company had received a warning letter from the USFDA for the said unit, it added.

"From the disclosures made by the company, it was observed that the company had disclosed very limited and restricted information. The only fact disclosed was that a warning letter was received from USFDA. The company did not disclose the details on the reason and the non-compliance/aberration observed for which the warning was issued," Securities and Exchange Board of India (Sebi) said in the letter.

The markets regulator also pulled up the pharma company for claiming that information about the USFDA action was disclosed in investor's earning call, the transcript for which was disclosed on stock exchanges, even when it "did not provide any additional information beyond what was already disclosed".

Also, Sebi said APL had submitted to it that the USFDA was not satisfied with the response of the company on two of the observations issued in the inspection, for which a warning was issued in January 2022.

The two observations issued were not considered serious by APL, claiming it had already taken robust corrective actions to mitigate the risk and the concerns raised by USFDA have already been adequately addressed and status of corrective actions being continuously updated to the USFDA.

"APL's submission on not considering the warning as serious is not tenable. While the warning letter is available on the USFDA website, the company chose to make limited disclosure. Mere disclosure of the receipt of the USFDA warning letter is insufficient and an impediment to assess the current status," Sebi said.

Stressing that the non-compliance by APL is "viewed seriously", Sebi warned the company asked it to "ensure compliance with all applicable provisions" of regulations. "Any such aberration in future would be viewed seriously and appropriate action would be initiated," Sebi said, asking the company to place its letter before APL's next board meeting and disseminate the same to the stock exchanges.