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Aurobindo Pharma share slips 4.5% on class action suit in US

BusinessToday.In     April 8, 2020

Aurobindo Pharma was the only Nifty pharma stock in the red falling 4.5% on Wednesday. This comes after a class-action suit was filed against some drug manufacturers, including Aurobindo Pharma in a US court for allegedly concealing facts about a cancer-causing agent, N- nitrosodimethylamine, presence in metformin medicine.

Metformin is the most prescribed oral pharmaceutical drug for patients with type-2 diabetes.

Florida-based law firm MSP Recovery filed the petition on April 3 in the US District Court for the Southern District of Florida on behalf of similarly situated healthcare insurers to recover payments unlawfully induced by the drug makers- Aurobindo Pharma, Aurolife Pharma, LLC, and Heritage Pharmaceuticals LLC.

Post the announcement, Aurobindo Pharma shares were trading 4.57% lower at 425.15 as against the last closing value of Rs 445.50 on BSE. The stock had touched an intraday high of Rs 476, rising 6.85% earlier. The stock has traded in a wide range of Rs 50.85, with an intraday volatility of 5.31%.

Meanwhile, the Pharma sector has gained 4.1% in Wednesday's trade. The stock has risen 12% in the last one week and declined almost 14% in one month and 3.85% year to date.

Market capitalisation of the large-cap stock stood at Rs 25,757.86 crore today.

Currently, Aurobindo Pharma stock trades higher than 5 day and 20-day moving averages but lower than 50, 100 and 200-day moving averages

As per the filed petition, the drugmakers breached their express warranties with respect to their Metformin drugs because the drugs did not comply with current good manufacturing practices, were adulterated and contaminated, were not bioequivalent to branded drugs, and could not lawfully be sold, the petitioner alleged.

The petition was based on tests done by Valisure, an online pharmacy. Valisures tests revealed that the metformin produced by Aurobindo and Heritage were contaminated with NDMA with levels between 37 and 266 ng per tablet.

On April 3 , the stock fell 15% to Rs 333.35 in early trade after the firm said the $900 million deal to acquire Sandoz Inc's US-based generic oral solids and dermatology businesses, has been mutually called off.

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