US probe fears pull Ranbaxy down to 7-year low

Pharma major Ranbaxy Laboratories Ltd plunged by around 11 per cent on the Bombay Stock Exchange...

Pharma major Ranbaxy Laboratories Ltd plunged by around 11 per cent on the Bombay Stock Exchange BSE on Monday, the stock8217;s biggest fall in seven years, on concerns that a US probe against the drug maker on alleged charges of fraud, that allowed 8220;adulterated and misbranded8221; medicines to be sold in the US, may hit the Indian firm8217;s sales there.

The company has said the USFDA charges are 8216;baseless8217; and would be filing a response on Monday July 14 in the US District Court for the district of Maryland. It said its US business 8220;is normal8221; and the Daiichi-Sankyo deal is binding, final, and on track. The Ranbaxy stock closed at Rs 475.90 on the BSE. It was trading at an all-time high of Rs 613.70 a month ago. Daiichi Sankyo, meanwhile, fell 5.5 per cent in Tokyo, reports said.

8220;The company will strongly defend its position. Ranbaxy vehemently denies the allegations contained in the motion that has been filed by the US Department of Justice DOJ, seeking certain documents. No legal proceedings in the sense of a prosecution have been initiated against the company and Ranbaxy continues to cooperate with the DOJ with regards to the investigation and has agreed to produce the specific documents sought by the Motion.8221; said a Ranbaxy statement.

An investigation has been underway for approximately three years but no charges have been filed against the company as yet. The company statement added that its business in the US continues to be normal and Ranbaxy 8220;remains committed to providing high quality generic medicines at affordable prices to its customers and patients in the United States.8221; Clearing speculation about possible dark clouds over the Daiichi Sankyo-Ranbaxy deal, Ranbaxy clarified that the deal with Japanese firm 8220;is binding and final and remains on track.8221;

The suit filed by DOJ against Ranbaxy and its US-based consultant, Parexel Consulting, accuses the company to have concealed crucial information and forged data to get a favourable judgement on an ongoing investigation by the United States Food and Drugs Administration USFDA into the sale of sub-standard drugs in that country.

The suit, filed with the District Court of Maryland, has asked Ranbaxy and Parexel to produce all relevant documents for verification. If Ranbaxy is unable to defend itself, the company may have to pay serious legal damages and it may result in serious maligning of reputation apart from adverse business implications on Ranbaxy8217;s US operations, which contributed around 23 per cent to the company8217;s total turnover in the last fiscal.

US Dept of Justice suit

8226;It accuses Ranbaxy of concealing information and forging data to get a favourable judgement on an ongoing investigation by the USFDA into the sale of sub-standard drugs in that country

8226; Ranbaxy to produce all relevant documents for verification

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8226; If it is unable to defend itself, the company may have to pay serious legal damages