Aurobindo co-founder faces $3M fine for insider trading before Pfizer deal

In May of that year, Pfizer signed an expanded licensing deal with Aurobindo to acquire the rights to 55 solid oral dose products and five sterile injectable products for patients in more than 70 emerging market countries.

More than 10 years after Pfizer and Aurobindo inked an expanded licensing deal bringing the latter’s drugs to dozens of countries, Indian regulators have spotted impropriety prior to the agreement. That’s a slice of bad news for Aurobindo's co-founder and his wife.

The Securities and Exchange Board of India (SEBI) hit P.V. Ramprasad Reddy and wife Sunila Rani with an Rs 22.6 crore ($3.12 million) penalty on insider trading charges based on actions that occurred before an Aurobindo and Pfizer licensing deal in May 2009.

The agreement widened Pfizer and Aurobindo’s initial deal in July 2008 that covered five generic drugs and helped Aurobindo later take its place as the second-largest producer of generic drugs in the U.S.

The products included antibiotics and anti-infectives, and they covered a broad range of disease areas like cardiovascular and central nervous system disorders, the company said. Pfizer said it would market the 60 products in phases "tailoring its approach for different regions."

In 2011, the two drugmakers once again expanded their agreement to include 39 solid oral dose drugs in the U.S., 20 in Europe and an additional 11 in France. The deal, marketed in the U.S. under Pfizer’s Greenstone subsidiary, also included 12 sterile injectables.

Some of those oral solid dose tablets and sterile injectables have been the focus of FDA scrutiny following Aurobindo’s $1 billion pickup of more than 300 generics from Novartis’ U.S. Sandoz unit in September 2018.

Earlier this month, an American subsidiary of Aurobindo voluntarily recalled 2,352 bottles—each containing about 1,000 tablets—of generic statins after certain lots were found to have incorrect or missing labels and sometimes missing expiration dates, according to an FDA Enforcement Report. Aurobindo U.S. subsidiary Aurolife initiated the recall in late July after the product was distributed nationwide, the FDA said.

The most recent recall was unrelated to Aurobindo pulling 80 lots of valsartan off U.S. shelves in February as part of a global FDA recall of "sartan" products linked to potentially carcinogenic API produced by Chinese and Indian manufacturers. The recalls from a variety of producers have resulted in shortages in the U.S. of losartan. 

Regulators have also knocked Aurobindo for manufacturing issues at its Indian sterile injectables plants. In April, the FDA posted a Form 483 for a plant in Telangana with nearly a dozen observations, including issues with the quality control unit.

Among the observations were poorly trained visual inspectors and indifferent treatment of customer complaints about vials that had black particles in them. The company said the particles "were intrinsic" to manufacturing when FDA inspectors indicated they most likely were from shedding stoppers.

According to the board, Reddy and his wife made "creeping acquisitions" of Aurobindo stock before news of the Pfizer agreement went public and offloaded their shares once the pair of drugmakers formally announced the deal.

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