NEW DELHI, July 16 – Top Indian generic drugs firm Ranbaxy said Wednesday its sale of a majority stake to Japan\’s Daiichi Sankyo would go ahead despite a US probe linked to the firm\’s product quality.
The US Justice Department earlier this month filed a case in a Maryland federal court alleging that Ranbaxy forged documents relating to an investigation into the quality of the company\’s drugs.
"The deal with Daiichi Sankyo is binding and remains on track," Ranbaxy\’s chief executive and managing director, Malvinder Singh, told reporters.
"There is no exit clause in the agreement with Daiichi Sankyo," Singh said, adding that Ranbaxy denied the allegations against it.
"We are confident we will resolve this and we will come out of it," he added.
The deal between Japanese drug maker Daiichi Sankyo and Ranbaxy was announced last month and is valued at up to 4.6 billion dollars. It was seen as an effort by Daiichi to gain entry into the global generic drugs market.
The allegations against Ranbaxy include charges that it manufactured weak or adulterated HIV drugs for thousands of AIDS patients in Africa.
Ranbaxy received millions of dollars through US government contracts to provide the low-cost antiretroviral drugs for AIDS relief.
Investigators at the US Justice Department and Food and Drug Administration (FDA) allege that some of the drugs were poorly made, unstable or impotent.
According to court filings and lawyers close to the US investigation, Ranbaxy fabricated documents to cover up the substandard products.
"Daiichi Sankyo, as a part of the due diligence, were completely aware of this issue that\’s open with the US FDA," Singh said.
"This is a motion to seek additional information. There\’s nothing beyond that," he said of the company\’s legal woes.
"Our intention is within the next month to supply all the information that they want. It\’s our understanding with them that this motion will be recalled once that information is sent to them," Singh said.
"Our business in America carries on as it was. There\’s absolutely no change," he said, adding, "We will be launching products in America."
About 23 percent of Ranbaxy\’s 1.6 billion dollars of revenue last year came from the United States.
Since news of the legal action emerged earlier this week, Ranbaxy shares had fallen by 122.2 rupees or 22.99 percent to 409.25 rupees at Tuesday\’s close. On Wednesday the shares recovered 55.05 rupees, or 13.45 percent, at 464.3.
Singh alleged a "multinational and a leading Indian company are working in concert to bring our share price down."
"I have a clear sense of what is happening. People are trying to create confusion and obviously somebody is trying to bring our price down so that they can come at a lower price," he said, refusing to name the rivals.
Daiichi Sankyo had offered to buy a controlling stake in Ranbaxy on June 11, when the firm\’s founders accepted an offer to sell a 34.8 percent stake to the Japanese company at 737 rupees a share.