Shares in Alkem Laboratories fell as much as 8 per cent on Monday after the company confirmed it was in talks with German authorities who had accused it of fudging data in some clinical trials.
The scrip settled the day 4.44 per cent loweron BSE.
Reuters reported on Friday that German authorities had accused the company of manipulating heart readings of patients in some trials for the antibiotic cefuroxime and the brain disorder drug rulizole, following an inspection of Alkem's plant in Taloja in western India in March 2015.
The European Medicines Agency (EMA) is investigating the medicines after Germany reported its findings to the EMA and urged it to take action in a report that was posted on the EMA website.
Alkem said in a statement on Saturday that the company had responded to the German authorities with a "robust remediation plan" and would also submit "suitable clarification" to the EMA.
Similar findings by European regulators concerning manipulation of electrocardiogram data at two other Indian firms, GVK Biosciences and Quest Lifesciences, led to the recall of nearly 700 medicines last year.
Alkem said the inspection concerned studies conducted by the company between March 2013 and March 2015 on two products, one of which is selling, while the other is yet to reach the market. It did not name the products.
It also said it had changed staff, upgraded equipment and improved its quality assurance systems at the Taloja plant since Germany's inspection.
Alkem, among the fastest-growing drugmakers in India, said sales from Europe made up less than 1 percent of its total revenue in the nine months to December 2015.
Still, the company's shares were down 5 percent at 0459 GMT on Monday, after falling as much as 8 percent earlier in the day - their lowest since Feb. 29. The company debuted on the Indian stock exchanges in December.