Reports surface of Daiichi locking horns with Singh brothers in Singapore arbitration court
Five years after the Ranbaxy promoter-family, the late Parvinder Singh’s sons Malvinder and Shivinder Singh, sold their entire stake in the Indian drug-maker to Japanese major Daiichi Sankyo, the story refuses to die down.
There has scarcely been a dull moment, what with repeated raps from the USFDA, a whistle-blower and now reports of arbitration.
Ranbaxy’s erstwhile promoters had wowed India Inc by pulling off a $4-billion sale even as the economic downturn unfolded in 2008. But that is all in the past.
Today, the mistrust between players in the Ranbaxy transaction has boiled over, with reports now emerging that Daiichi-Sankyo has possibly locked horns with the Singh siblings at the Singapore Arbitration Court. The brothers are being faulted for misrepresenting critical information regarding the Department of Justice and Food and Drug Administration (FDA)-related investigations into their former company.
Earlier this year, Daiichi-owned Ranbaxy had said it would fork out $500 million to settle civil and criminal charges against it in the US market. The company had been held guilty of falsifying data and taking short-cuts with processes involving its medicines at two manufacturing facilities in India.
As skeletons tumbled out of Ranbaxy’s cupboard, the mistrust surfaced and Daiichi said so in as many words earlier this year. The Singh brothers then reacted with a strong statement saying: “Daiichi-Sankyo’s allegations of concealment and misrepresentation are false and baseless.”
This time though, reports of arbitration between Daiichi and the Singhs are being met with silence from both sides, with neither confirming whether the process has been initiated in Singapore.
But as little information trickles out from the companies, industry watchers point out that such spats are not uncommon. “In the event of breach by any contractual party, pursuant to closure of a corporate deal, it is common to resolve disputes through an institutional arbitration, if provided contractually,” said Neerav Merchant, Partner (Disputes), with law firm Majmudar & Partners.
“It appears that the parties may have agreed to resolve disputes by way of arbitration. One can speculate that the parties would have agreed to either English law or Singapore law, as parties prefer to go with neutral governing law and rules in cross-border arbitrations,” he added.
Questions can be asked on whether Daiichi undertook a thorough due diligence or the Singh brothers disclosed the entire gravity of the FDA situation, but the outcome is a wet blanket for mergers and acquisitions in the country, said a former Ranbaxy employee.
Former Pfizer MD Kewal Handa agrees. Multinationals will undertake a more stringent scrutiny of companies they look to buy and, as a result, there will be fewer companies that will meet these standards.