Shares of drug maker Ranbaxy Laboratories ended 3.6% up at Rs. 455.50 on Tuesday after crashing 4% in early trade on the Bombay Stock Exchange following a $500-million (about Rs. 2,750 crore) fine imposed by US authorities on the company for selling adulterated medicines in the US and lying about it to the authorities.
"The settlement is a positive development for Ranbaxy as it has already made provisions for the penalty," said Sarabjit Kour Nangra, vice-president, research, Angel Broking.
"Investors are buying shares as the uncertainty over the company's prospects has been removed. This is a big boost," said Ranjit Kapadia, senior vice president, Centrum Broking, another broking company.
"While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy's stakeholders," said Ranbaxy CEO and managing director Arun Sawhney in a statement.
The criminal case began as a whistleblower suit filed in April 2007 by former Ranbaxy director Dinesh Thakur, who gets $48.6 million (about R266 crore) as part of the settlement.
Thakur discovered the company was falsifying drug data and violating good manufacturing and lab practices.
Thakur notified the management about them. "When they failed to correct the problems, it left me with no choice but to alert healthcare authorities," Thakur said in a statement after the court papers were filed. He could not, however, be reached for more comments.
Ranbaxy has now admitted to selling Sotret, gabapentin, and ciprofloxacinate produced at its Paonta Sahib facility in the US in 2005 and 2006.
Sotret is Ranbaxy's branded generic form of isotretinoin, a drug used to treat severe form of acne. Gabapentin is used to treat epilepsy; ciprofloxacin is an antibiotic.