Shares of pharma companies are slipping. Know why

Shares of Aurobindo Pharma, a mid-sized drugs maker, slipped as much as 3 percent on a media report that one of its factories came under USFDA scrutiny and certain queries were raised on its quality maintenance standards.

The Economic Times reported that the week-long inspection by the USFDA of Aurobindo's Unit 12 manufacturing site resulted in some questions related to quality management system.

As a consequence, Aurobindo dropped 1.3 percent, or 9.90 rupees, to quote at 740 rupees on the National Stock Exchange, where 11.7 lakh shares were traded in comparison with the 5-day average of 17.5 lakhs.

Aurobindo has US as its main market, contributing nearly 50 percent of its sales. This statistic is common to nearly all leading pharma companies, who are major exporters of generic medicines to western markets. They come under intense watch of the USFDA, which is the flag bearer of quality and good manufacturing standards for drug makers across the world who are keen to tap the world's largest market for pharmaceuticals.

(Image credit: Indiatimes)