Ranbaxy Slumps After Daiichi Seeks Legal Remedy: Mumbai MoverKetaki Gokhale
Ranbaxy Laboratories Ltd., India’s biggest drugmaker, fell the most in four years in Mumbai trading after Japanese parent Daiichi Sankyo Co. said it was pursuing “legal remedies” against former shareholders for hiding information relating to U.S. investigations of the company.
Shares of Ranbaxy slumped 8.5 percent, the most since March 2009, to 394.30 rupees at the close in Mumbai. The benchmark S&P BSE Sensex Index declined 1.9 percent.
“Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the U.S. DOJ and FDA investigations,” the Tokyo-based company said in a statement yesterday. “Daiichi Sankyo is currently pursuing its available legal remedies.”
The Japanese drugmaker agreed to buy a controlling stake in Ranbaxy for $4.6 billion three months before the U.S. Food and Drug Administration said in September 2008 that it would block more than 30 generic drugs made at two of the Indian company’s plants because of manufacturing and testing defects. Daiichi Sankyo said it had made significant changes to Ranbaxy’s management, culture, operations and compliance to correct the past conduct which led to the probes in the U.S.
“The Daiichi issue adds to Ranbaxy’s legal woes and to the uncertainty around the business,” Sarabjit Kour Nangra, vice-president for research at Angel Broking Ltd. in Mumbai, said by phone. “There will be some overhang on the stock.”
India’s health ministry has asked the nation’s drug regulator to review U.S. court documents that alleged Ranbaxy sold adulterated drugs, a ministry official familiar with the matter said yesterday. India’s biggest drugmaker on May 13 agreed to pay $500 million to resolve the U.S. fraud allegations.