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On June 27, Aurobindo Pharma (APL) reported receiving a warning notice from capital markets regulator Securities and Exchange Board of India (SEBI) for failing to disclose information on an ongoing audit of one of its manufacturing facilities in Hyderabad and findings from the US Food and Drug Administration (USFDA).

The company "disclosed very limited and restricted information", according to the SEBI warning letter, which also noted that the company had not provided specific justifications or taken the USFDA's findings seriously.

Aurobindo Pharma stated in a regulatory filing that the letter related to specific disclosures made by the firm on the ongoing USFDA audit of the company's Unit-1 and observations made by the USFDA throughout the period of 2019 to 2022.

The SEBI letter, which was delivered to the company on June 24, 2022, relates to statements made by APL regarding Official Action Indicated (OAI) and a warning letter that the USFDA had issued following an inspection of Unit I, a Hyderabad-based facility for the production of APIs (active pharmaceutical ingredients), in August 2021.

According to the SEBI letter, the business had reported on November 10, 2021 that the USFDA had labelled the inspection at Unit I between August 2 and August 12, 2021 as OAI, but that it would not have an impact on the facility's ongoing commercial deliveries to the US market.

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 pharmaceutical company was criticised by SEBI for asserting that information on the USFDA action was given in the investor's earnings call, whose transcript was made public on stock exchanges. even when it "did not provide any additional information beyond what was already disclosed".

Aurobindo Pharma informed SEBI that the USFDA was dissatisfied with the company's reaction to two of the inspection's remarks, for which a warning was issued in January, according to information provided by the company.

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.

(With PTI inputs)

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