Sun Pharma's US subsidary unfazed by FDA concerns

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Sun Pharma's US subsidary unfazed by FDA concerns

In the past few months, Sun Pharma's US subsidiary Caraco has run into trouble with the food and drug administration (FDA) after which an independent director has resigning citing issues of corporate governance. The company seems unfazed.

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In the past few months, Sun Pharma's US subsidiary Caraco has run into trouble with the food and drug administration (FDA) after which an independent director has resigning citing issues of corporate governance. The company seems unfazed. CNBC-TV18's Sriram Iyer and Gautam Srinivasan report.

The resignation by an independent director from Caraco's board last week said that corporate governance issues in the company may be linked to its current issues with US FDA. The director, Georges Ugeux, said in his resignation, "The basis for my disagreement is management's and the majority shareholder's absolute refusal to permit a focused independent look at corporate governance leading up to the FDA seizure." However, Caraco maintains that the company is on the right track. The company said that all members of the current board, including the independent directors, believe that all shareholder interests are aligned, and that the company is moving in the right direction to enable it to resolve the FDA's concerns as expeditiously as possible.

While Caraco is trying to get out of the FDA tangle, taro has made a legal move. CNBC-TV18 is in possession of a copy of the taro petition filed in a US court, where it is allegedly attributing loss of business to Sun Pharma's actions. Taro's petition alleges that Sun Pharma after accessing data on cost, pricing and incentives provided to its distributors, launched cheaper, competitive products of its own. The petition alleges that Sun Pharma was influential in taro losing its phenytoin business with wholesalers like Mckesson Corp, Kinray and ANDA incorporation.

In a statement, Sun Pharma has called these allegations as baseless and futile. It said "Sun will fight this action vigorously and will take all legal steps available to it to ensure that the taro resources being expended on this baseless litigation be restored to the company."