Shares in Indian generic drugs giant Ranbaxy Laboratories crashed as much as 35 percent in early trade on Monday after the US Food and Drug Administration suspended imports from one of its factories.
Ranbaxy slid to 297.25 rupees on the Bombay Stock Exchange, down 34.99 percent, before recovering to 341.00 rupees, down 25.42 percent.
The FDA issued an alert on Friday against a Ranbaxy factory in Mohali in the northern state of Punjab, meaning imports are suspended from the plant.
A spokesman for Ranbaxy, part of Japan's Daiichi Sankyo group, was not immediately available for comment.
In May, Ranbaxy pleaded guilty to US charges of selling adulterated antibiotic, acne, epilepsy and other drugs and agreed to a record $500-million fine.
The US fraud, uncovered over eight years, was exposed by a whistle-blowing ex-employee who said Ranbaxy created "a complicated trail of falsified records and dangerous manufacturing practices".
India's drug industry has come under scrutiny from global regulators in recent months over suspected manufacturing problems at factories.
In July Britain's healthcare regulator recalled 16 drugs from Indian pharmaceutical firm Wockhardt after finding deficiencies at one of its local manufacturing plants.
India's government has defended its lucrative generic drug industry, which accounts for nearly $15 billion in annual exports, as safe and tightly regulated.