Ranbaxy’s ex-owners deny charges of hiding probe details

AFP/New Delhi

The billionaire ex-owners of Ranbaxy denied yesterday charges by the Japanese buyers of the Indian generics giant that they hid key details about a US probe into the safety of the company’s drugs.

Daiichi Sankyo alleged on Wednesday former shareholders of Ranbaxy concealed vital information about the inquiries when it bought a controlling stake in the drugmaker in 2008, in a $4.6bn deal to gain entry to the growing global copycat drugs market.

“The phrase is an obvious reference to the members and companies of the Singh family who were shareholders of Ranbaxy,” said the former controlling shareholders, led by billionaire brothers Malvinder Singh and Shivinder Singh, in a statement late yesterday.

“Daiichi Sankyo’s allegations of concealment and misrepresentation are false and baseless,” they said.

Last week, New Delhi-based Ranbaxy Laboratories, India’s largest drug company by sales, pleaded guilty in the US to charges of making adulterated medicines at two Indian plants and agreed to a $500mn settlement.

Shares of Ranbaxy plunged yesterday by over 10% before recovering some losses to close down 8.80% at Rs393.15 on the back of Daiichi’s accusations.

“There has been a continuous flow of negative news about this company - that’s something shareholders don’t like,” Sarabjit Kour Nangra, pharmaceutical research vice-president at Mumbai’s Angel Broking, said.

Daiichi said on Wednesday it was pursuing “available legal remedies” against the company’s former shareholders for allegedly concealing information.

Daiichi did not reply to an e-mail seeking more information but analysts said its legal options could include seeking monetary damages.

The Singh brothers said Daiichi’s accusations were intended to “shift the blame” for Ranbaxy’s situation “away from itself.”

The Economic Times, quoting a person it described as familiar with the situation, said on its website Daiichi was examining suing the Singhs for “reputational damage” and to reclaim the $500mn penalty Ranbaxy paid.

Since Ranbaxy, the Singh brothers have focused much of their energies on the other company that they control, Fortis Healthcare, a major Indian health player.

Analysts have said Ranbaxy and other Indian drugmakers may find it tough to win new contracts in their main US market, with the Ranbaxy case raising questions about safety standards of Indian-made drugs.

The fraud, investigated over eight years by US authorities, was brought to light by a whistle-blowing ex-employee who said Ranbaxy created “a complicated trail of falsified records and dangerous manufacturing practices.”

India’s drug regulator - the Drugs Controller General of India - is now examining legal documents filed in the US to see whether Ranbaxy violated any Indian safety norms.

The Japanese firm has seen the value of its Ranbaxy purchase plummet since it bought the firm, which earlier this month reported a 90% drop in quarterly net profit to Rs1.26bn ($23.3mn) from a year ago.