Concealed compliance info lands ex-Ranbaxy owners $385m costs

By Dan Stanton contact

- Last updated on GMT

Image: iStock/VIPDesignUSA
Image: iStock/VIPDesignUSA

Related tags: Daiichi sankyo, Ranbaxy laboratories

The former owners of Indian drugmaker Ranbaxy have been ordered to pay Daiichi Sankyo $385m for concealing quality problems across its manufacturing network before selling the business.

In November 2008​, Daiichi Sankyo paid $4.5bn (€4bn) for the controlling stake in Ranbaxy to Malvinder Singh and Shivinder Mohan Singh.

During the Japanese firm’s six year ownership, the generics drugmaker was found guilty of manufacturing and distributing adulterated drugs and knowingly making false statements to the US Food and Drug Administration (FDA), resulting in a consent decree and a $500m penalty​.

The felonies dated back to inspections at Ranbaxy sites from 2003 to 2008. Daiichi Sankyo said in 2013 it believed “certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the US DOJ [Department of Justice] and FDA investigations”​ and began pursuing a legal challenge against the Singh family.

And last week, the International Court of Arbitration of the International Chamber of Commerce announced the former Ranbaxy owners have to pay Daiichi Sankyo INR 16bn ($385m) in damages, plus a further $15m in attorneys’ fees and expenses.

Daiichi Sankyo said it will announce the financial impact of the award when the timing of collection of the amount is confirmed.

The firm accepted an offer in 2014​ for Ranbaxy from Sun Pharma, and in March 2015 the $3.2bn merger was complete.

Sun Pharma has previously said sorting out the Ranbaxy’s compliance issues would be a key focus of its integration efforts, but did not respond to a request for an update from this publication this week.

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