NEW DELHI: Daiichi Sankyo believed it had scored a coup in 2008 when it outbid rivals to buy Indian generics giant Ranbaxy for $4.6bn but its foray into the high-growth copycat drugs arena has brought the Japanese drugmaker only pain.
Last month, Ranbaxy pleaded guilty to US charges of selling adulterated antibiotic, acne, epilepsy and other drugs and agreed to a record $500m fine, and since then the bad news has kept on flowing.
In a new blow at the end of the week, Apollo Pharmacy, India’s biggest branded drug retail network with more than 1,500 outlets, issued a “cautionary advisory” against drugs made by Ranbaxy.
A Ranbaxy spokesman insisted all its products in India and globally were “safe and efficacious” and that it was addressing Apollo’s concerns.
The Apollo advisory came days after an outspoken Indian Supreme Court lawyer filed a public interest suit in the country’s top court seeking cancellation of Ranbaxy’s licence.
“It is not a tale of cutting corners or lax manufacturing practices but one of outright fraud” and a “heinous crime”, the suit filed by lawyer Manohar Lal Sharma said. The Supreme Court said it would hear the case this week, though no day has been set.
“There has been a continuous flow of negative news” about Ranbaxy, Sarabjit Kour Nangra, pharmaceutical vice president at Mumbai’s Angel Broking, said.
Daiichi’s Ranbaxy purchase was part of a calculated strategy that the Indian company’s dominance in generic medicines and developing markets would help the Japanese firm grow sales as Daiichi’s drugs came off patent.
The Japanese firm, whose share price and earnings have taken a beating over the acquisition, paid a more than 30 percent premium for the shares of the Indian company.
Even though the purchase gave Daiichi far greater global reach, the price paid by the Japanese firm raised analysts’ eyebrows at the time as Ranbaxy was already under the scrutiny of US regulators. Some analysts have suggested Daiichi may have been overeager to diversify to increase its global sales when it snapped up Ranbaxy.
The US fraud, uncovered over eight years, was exposed by a whistle-blowing ex-employee who said Ranbaxy created “a complicated trail of falsified records and dangerous manufacturing practices”.
The Drugs Controller General of India is already examining legal documents filed in the United States to see whether Ranbaxy violated any Indian safety norms and has said it will complete its preliminary findings in a month.
AFP
