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P.T. Jyothi Datta

The recent price-fixing allegations came close on the heels of the boardroom shake-up that Ranbaxy witnessed on Monday, when its CEO and Managing Director, Mr D.S. Brar, announced his decision to step down.

New Delhi , Dec. 23

THE bogey of financial irregularities in the UK came back to haunt pharma-major Ranbaxy Laboratories Ltd — with the UK authorities naming Ranbaxy UK Ltd (RUKL) as one of the seven companies that was likely to be sued by the State-funded National Health Service (NHS) for allegedly fixing the price of antibiotic amoxicillin.

Responding to the development that took place late on Monday, Ranbaxy's spokesperson told Business Line that its UK subsidiary had done nothing "improper" and the company would "defend its case vigorously".

Ranbaxy's UK subsidiary had clocked sales of $30 million for the calendar year 2002. Europe, CIS and the African region are expected to close on a combined $150 million in 2003.

But RUKL has faced problems in the past too. In 2001, the company's top management had been sacked for financial irregularities. This had led to the operations of the subsidiary coming under the scrutiny of the Indian Enforcement Directorate in late 2001.

The recent price-fixing allegations came close on the heels of the boardroom shake-up that Ranbaxy witnessed on Monday, when its CEO and Managing Director, Mr D.S. Brar, announced his decision to step down — a move that was seen to pave the way for Mr Malvinder Singh, the elder son of promoter and former-Chairman, the late Dr Parvinder Singh.

The NHS is expected to sue the seven companies for an estimated £30 million, according to agency reports. However, analysts felt that since the amount was small, it was unlikely to cause much of a dent to Ranbaxy's image.

Further, agency reports said that investigators in the UK were of the opinion that Ranbaxy's local unit was among those companies that conspired to raise the price of the antibiotic amoxicillin by up to 260 per cent.

Price-fixing allegations were first made by the NHS in mid-2002, regarding pencillin-based medicines and an anti-coagulant warfarin, which Ranbaxy did not manufacture.

Ranbaxy spokesperson said that it had recently received a notice from the UK authorities, in this context.

The company intends to defend legal proceedings vigorously as it had done nothing improper, he said.

He pointed out that Ranbaxy did not manufacture one of the four drugs that the authorities had listed. Also, the period under scrutiny by the NHS for claim was only about two years, between August 1998 and September 2000.

Meanwhile, agency reports add that the UK authorities also plan legal action against the companies for allegedly defrauding the NHS of an additional £170 million by fixing prices of 30 other prescription drugs.

Besides Ranbaxy, other companies under the NHS scanner include Norton Healthcare Ltd, Norton Pharmaceuticals Ltd, Regent-GM Laboratories Ltd, Kent Pharmaceuticals Ltd, Generics U.K. Ltd. and DDSA Pharmaceuticals Ltd.

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