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Japan's Daiichi says key details 'concealed' in Ranbaxy sale

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(Globalpost/GlobalPost)

The Japanese owners of Ranbaxy on Wednesday accused former shareholders of the Indian company of concealing key information about a US probe into the safety of medicines made by the New Delhi-based firm.

Last week, Ranbaxy Laboratories pleaded guilty in the United States to charges of making and distributing adulterated drugs at its two Indian plants of Paonta Sahib and Dewas and agreed to a $500 million settlement.

"Daiichi Sankyo believes certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the US Department of Justice and Food and Drug Administration (FDA) investigations," Daiichi said in a statement.

Daiichi did not name the shareholders but said it was pursuing "available legal remedies". It did not reply to an email from AFP requesting further information.

Daiichi bought a controlling stake in generics giant Ranbaxy in 2008 in a $4.6 billion transaction to gain entry into the fast-expanding global copycat drugs market.

The Japanese firm purchased its majority stake from the controlling shareholders led by Indian brothers Malvinder Singh and Shivinder Singh as well as through a new issue of shares and an open share offer.

But the Japanese firm saw the value of its investment plummet as a result of regulatory issues facing Ranbaxy in its key US market.

The Singh brothers could not be reached for comment late Wednesday but in the past they have declined to discuss regulation.

Meanwhile, Ranbaxy said separately Wednesday it has spent over $300 million to overhaul its operations and ensure no repeat of drug safety violations that led to the US fine.

"Ranbaxy is a different company today," chief executive Arun Sawhney said in a statement, adding that all the company products "in the global market are safe".

"We have made significant improvements in the way we conduct our business to ensure greater quality control and have made investments of over $300 million in our manufacturing facilities to install state-of-the-art technologies," he added.

The US settlement ended eight years of criminal and civil investigations into Ranbaxy.

Daiichi said it continued to support Ranbaxy in its efforts to "correct the conduct of the past" which led to the investigations by the US Department of Justice and the FDA.

"These efforts include significant changes to Ranbaxy's management, culture, operations and compliance," it added.

The latest statements came amid media articles suggesting 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 was brought to light by ex-employee Dinesh Thakur, who wrote in a public statement that Ranbaxy had created "a complicated trail of falsified records and dangerous manufacturing practices".

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http://www.globalpost.com/dispatch/news/afp/130522/japans-daiichi-says-key-details-concealed-ranbaxy-sale