FDA alert drives cephalosporin sales drop at Aurobindo

By Nick Taylor

- Last updated on GMT

FDA alert drives cephalosporin sales drop at Aurobindo

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A FDA import alert drove a double-digit drop in quarterly cephalosporin sales at Aurobindo and led to a one-third cut in full year earnings. 

The decline in cephalosporin sales comes as India-based Aurobindo continues to feel the fallout of an import alert issued by the US Food and Drug Administration (FDA) in February 2011. Fourth quarter sales of the cephalosporin were down 17 per cent year-on-year and dragged on overall performance.

Govindarajan Narayanan, CEO of Aurobindo, said: “We have concluded a challenging year highlighted by full impact of the FDA alert on our Unit 6 cephalosporin manufacturing facility, high cost of materials, inflation and notional loss on restatement of foreign currency borrowings​.”

Despite the drop in cephalosporin sales total fourth quarter and full year revenues from APIs (active pharmaceutical ingredients) actually increased. The improvement was underpinned by soaring sales of non-penicillin and non-cephalosporin APIs, such as antiretrovirals.

A 76 per cent jump in full year sales of these APIs helped Aurobindo post a double-digit rise in net sales, despite an estimated $36m (€29m) shortfall in formulations sales as a result of the FDA action.

However, the factors discussed by Govindarajan pushed up costs and contributed to total full year operating income falling by more than one-third. Total expenses for the full year were up 17 per cent as expenditure on materials, staff costs, and fuel grew.

Management reshuffle

In its fourth quarter earnings release Aurobindo detailed plans to replace its managing director, K Nithyananda Reddy, and executive chairman, P V Ramprasad Reddy. The decision comes in the wake of the Indian Central Bureau of Investigation looking into Aurobindo as part of a corruption case.

Aurobindo is accused of getting land in a special economic zone at a cheaper rate. K Nithyananda Reddy was named alongside Aurobindo in an investigation into the financial dealings of Jagan Mohan Reddy. The case continues.

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