Aurobindo Pharma’s plant in Anakapalli classified as VAI by US FDA

Earlier in February, three facilities of Aurobindo Pharma had received VAI in a week’s time.

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Pharmaceutical major Aurobindo Pharma has received an Establishment Inspection Report (EIR) from the US Food and Drug Administration (FDA) for its Unit XIV in the Anakapalli district of Andhra Pradesh.

The US drug regulator classified the aforementioned unit as Voluntary Action Indicated (VAI) according to an exchange filing by the company on July 17.

The US FDA conducted an inspection at Aurobindo Pharma Limited, Unit XIV in the Anakapalli district, Andhra Pradesh, from May 15-19. The exact reasons for the VAI have not been disclosed.

The FDA classifies a manufacturing unit as a VAI when it finds lapses during its inspection but doesn't deem it significant enough to prompt an official action.

Following the VAI status, companies can go ahead and receive approvals for drugs from the site and also proceed with the commercialisation of previously approved drugs. It is the second-best classification that a manufacturing facility of a pharma company can get from the US FDA.

Aurobindo Pharma is the biggest Indian player in the US market. This makes the company well-positioned to gain from the easing price erosion and increasing drug shortage in the US, including cancer medication, which has been advantageous for Indian players.

Also read: Aurobindo Pharma Q1 PAT seen up 6.1% YoY to Rs. 552.3 cr: Prabhudas Lilladher

Brokerages also expect a price-hiking cycle in the near future and anticipate players with a strong footing in the US market to gain from the latest developments.

Nuvama Institutional Equities also expects Aurobindo's US sales to improve by 4 percent on quarter to approximately $385 million in the April-June period. The brokerage said that the improvement will be on the back of new launches, market share gain in selected products, a ramp-up in overall volumes and the easing of price erosion in the US market.

Moreover, analysts at Elara Capital also expect Aurobindo Pharma to gain from the upcoming ‘patent cliff’ from 2023-2026. A patent cliff is when products go off-patent and generic players get an opening into the market.​

Earlier in February, three facilities of Aurobindo Pharma received VAI in a week’s time.