Daiichi may sue ex-Ranbaxy promoters for false info

Stung by the US FDA USD 500 million penalty, Japan's Daiichi Sankyo is exploring legal remedies to sue ex-Ranbaxy promoters, reports CNBC-TV18. 

Daiichi  says that certain former shareholders "misrepresented critical information".
On May 13, Ranbaxy, which was bought by Daiichi  Sankyo in 2008, pleaded guilty to criminal charges of manufacturing and distributing certain adulterated drugs manufactured at its two Indian facilities of Paonta Sahib and Dewas, while agreeing to a USD 500-millon settlement.
Daiichi says the promoters had misrepresented critical info about US Department of Justice (DoJ) and Food & Drug Administration (FDA) probes.
In a mega M&A deal that took the Indian corporate world by surprise, Daiichi had bought 34.8 percent controlling stake held by Ranbaxy's founders — the Singh family — at Rs 737 a share. It then made an open offer for up to 20 percent of Ranbaxy shares that is mandatory under Sebi regulations.
And this case dates back to 2005, when ex-Ranbaxy director Dinesh Thakur first reported falsified data from Ranbaxy's Ponta Sahib and Dewas plants to the management. However, when no steps were taken, Thakur took his concerns over these falsified records and violations of US drug manufacturing rules to the US FDA. This led to civil and criminal charges against Ranbaxy and some of its senior directors. Also Read: Ranbaxy whistleblower pockets $48.5mn for settlement
The trial has cost Ranbaxy dearly. First came a 3-year import ban in the US for over 30 drugs. During that time, it received no new drug approvals from the US FDA, until December 2011 when it signed a Consent Decree.
As part of the decree, Ranbaxy also forfeited 180-day exclusivity on 3 drugs, which translates into around 300 million dollars in lost opportunity. Ranbaxy also had to surrendered new drug applications on 27 compounds.
Add that to the 500 million dollar fine, and it nullifies any gains from Ranbaxy's blockbuster US launches like Atorvastatin. But the bigger damage is to Ranbaxy's image.
Anmol Ganjoo, pharma analyst, Antique Broking, in an interview dated May 15, had said: "It does not speak very highly of the processes that were followed by Ranbaxy. There will be a brand hit as far as the US market is concerned. In case of Ranbaxy, we have seen that typically, there are spill-overs in other markets as well."