Shares of Aurobindo Pharma plummeted 5% on 5 February after the pharma major halted production at one unit after USFDA issued 9 observations for its subsidiary.

The USFDA (United States Food and Drug Administration) inspected Unit-III in Telangana’s Sangareddy district, which is a formulation manufacturing unit of the company’s wholly-owned subsidiary, Eugia Pharma Specialties, between 22 January and 2 February and concluded the inspection with 9 observations.

The filing said, “The company has decided to temporarily stop manufacturing on certain lines to conduct holistic investigation and corresponding partial distribution thereto.”

The company said that they will respond to these observations within the stipulated time and are already working with the regulatory authority to accelerate the process and restart production as soon as possible.

Earlier, Eugia US Manufacturing LLC, USA, a wholly owned step-down subsidiary of Aurobindo Pharma, 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 in 90 days from the date of a definitive agreement for a total cash consideration of $52 million, along with $58 million in lease payments made to Eugia US Manufacturing LLC.

Furthermore, the company’s board of directors is set to meet on 10 February to consider and approve the unaudited standalone and consolidated quarterly earnings for the December quarter of the current fiscal year.

At 3:30 pm, the shares of Aurobindo Pharma closed 4.23% lower at Rs 1,021.65 on NSE.