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Ranbaxy scrip plunges

business Updated: Jul 14, 2008 21:10 IST
HT Correspondent

Shares of Ranbaxy Laboratories Ltd fell more than 10 per cent on Monday, their biggest drop in seven years, on concerns that a US probe into reported allegations of substandard drugs may hit its sales, even as the company denied the charges.

News reports that the US Department of Justice was investing allegations of substandard drugs not only pulled down the Ranbaxy scrip, but also added to speculation that the development could impact the $4.6-billion deal with Daiichi Sankyo, which is set to take control of the Indian company.

Ranbaxy denied the allegations, and said Ranbaxy its deal with the Japanese drug maker was on track.

Daiichi Sankyo said it was aware of the investigation.

“We would like to continue our work until the deal is closed while also keeping close eyes on what's going on between Ranbaxy and FDA,” a Reuters report quoted spokesperson Mamoru Tsunoda as saying in Tokyo.

Ranbaxy said in statement that “an investigation has been underway (in the US) for approximately three years and no charges have been filed against the Company."

The US Food and Drug Administration "has also gathered over 200 random samples of various products marketed by the company in the US. These products have been independently tested by the USFDA and were found to be complying with all the specifications,” it said. “Under these circumstances the company finds that the allegations are baseless.”

Ranbaxy said that the motion that has been filed by the US Department of Justice does not signify any legal proceedings. The company planned to file a response in the US District Court of Maryland on Monday.