New Delhi — Aurobindo Pharma Limited experienced significant turbulence as its stock price dropped 8 percent to hit a 3-month low on February 10, 2026, following disappointing Q3 earnings and regulatory setbacks.
The company's Eugia Pharma Specialities Ltd.subsidiary, which operates a formulation manufacturing unit in Sangareddy, Telangana, completed a US FDA inspection from January 27 to February 6 that resulted in 11 procedural observations.
Key Facts
• The US FDA inspection at Unit-III (Eugia) concluded with 11 procedural observations issued on February 6, 2026
• Aurobindo's stock touched an intraday low of Rs 1,142.80 on February 10, representing an 8% decline post-Q3 results announcement
• BNP Paribas India has revised its outlook, stating the Eugia III resolution has been delayed by several additional months due to fresh observations
The inspection marked one of the most significant catalysts for Aurobindo in 2026, with analysts closely monitoring the facility's regulatory status. The company has consistently faced challenges with Eugia III, having previously received a warning letter from the FDA in August 2024.
Aurobindo's management emphasized that the 11 observations are procedural in nature and that the company will respond within the US FDA's stipulated timeline. The company clarified that the observations will not impact existing approved products from the facility but will restrict future approvals until the issues are resolved.
Investors reacted negatively to the news, viewing the fresh observations as a setback to the company's growth trajectory in the highly lucrative US generics market. The stock had already been downgraded from Buy to Hold rating on December 1, 2025, and this regulatory disappointment further dampened market sentiment.
The significance of Eugia III cannot be understated—analysts estimate the facility contributes 6 to 8 percent of Aurobindo's overall revenues. A prolonged regulatory deadlock would impact the company's ability to launch new formulations in the US market, where it already operates 690 approved ANDAs (Abbreviated New Drug Applications).
Brokerages emphasized that sustainability of EBITDA margins and resolution of the Eugia III regulatory issues remain critical factors for investor sentiment going forward. The company's ability to diversify into complex manufacturing segments like biosimilars also depends on resolving these facility-level compliance challenges.
Addressing investor concerns, BNP Paribas India maintained an "outperform" rating on Aurobindo with a target price of Rs 1,480 per share, indicating confidence in long-term fundamentals despite near-term regulatory headwinds. The brokerage noted that their revenue and profitability estimates remain unchanged as they had been awaiting the inspection outcome.
Looking ahead, Aurobindo's near-term stock performance will hinge on two critical factors: successful resolution of the Eugia III regulatory challenges and sustained launch momentum for its pharmaceutical products across geographies. The company has invested in several new growth initiatives including biosimilars, API PLI scheme projects, and expansion into the Chinese pharmaceutical market, which it expects to commercialize in FY26-28.
Investors should closely monitor regulatory updates from the US FDA regarding Aurobindo's responses to the procedural observations and any timeline announcements for facility approval. The company's ability to navigate this regulatory maze will determine whether it can maintain its position as a leading US generic pharmaceutical supplier and achieve its ambitious growth targets.
Do You Know?
Aurobindo Pharma's US business has demonstrated remarkable resilience with a diversified product portfolio that includes over 690 approved ANDAs as of FY25, making the company one of India's leading pharmaceutical exporters to the United States.
Key Terms
• ANDA (Abbreviated New Drug Application): A regulatory pathway for generic pharmaceutical companies to market approved drug products without conducting new clinical trials
• FDA Observations: Regulatory findings issued during facility inspections that manufacturers must address within stipulated timelines to maintain manufacturing approvals
• Eugia III: A wholly-owned formulation manufacturing subsidiary of Aurobindo Pharma located in Telangana that produces finished pharmaceutical products for global markets
• EBITDA Margins: Earnings Before Interest, Taxes, Depreciation, and Amortization margins, a key profitability metric for pharmaceutical companies
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