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New Delhi, July 16 Ranbaxy Laboratories on Wednesday said that the probe by the US Department of Justice (DoJ) will not jeopardise its deal with Japanese pharmaceutical company Daiichi Sankyo.

“The Daiichi Sankyo deal is very much on track. There’s absolutely no change in any of the terms or conditions or pricing of the deal. There is no exit clause in the agreement with Daiichi Sankyo,” Mr Malvinder Mohan Singh, Chairman and Managing Director, Ranbaxy, said.

In June this year, Daiichi Sankyo announced that it will buy out 34.8 per cent stake held by the Singh family in Ranbaxy and make an open offer, starting August 8 and closing on August 27, for acquiring an additional 20-per cent stake in the Indian drug major. “Daiichi Sankyo, as a part of the due diligence, was completely aware of this issue that’s open with the US Food and Drug Administration (USFDA),” Mr Singh added.

The company also blamed its rivals for trying to bring down its share price after news about the US investigation broke out earlier this week. Ranbaxy’s shares dipped 23 per cent over the past two days to close at Rs 409.25 on Tuesday after the US Government said it was probing into whether the Indian drug maker had falsified data and sold sub-standard generic drugs.

Hitting out at rival companies, Mr Singh said a multinational and a leading Indian company were trying to bring down Ranbaxy’s share price by spreading confusion and speculation in the wake of the motion filed in the US.

“There has been speculation in the market due to lack of understanding and we have information that a multinational and a leading Indian company are working in concert to bring our share price down. I have a clear sense of what is happening. People are trying to create confusion and obviously somebody is trying to bring our price down so that they buy Ranbaxy’s share at a lower price,” Mr Singh said without naming the companies.

However, on Wednesday, the company’s shares rebounded with a 15 per cent increase to close at Rs 470.70 after Mr Singh told newspersons that the deal with Daiichi Sankyo was on track. Mr Singh said that the company was confident of resolving the issue with the US authorities. “This (the motion filed by the DoJ) is to seek additional information. There is nothing beyond that. We intend to supply all the information being sought by them within a month. It’s our understanding that this motion will be recalled once that information is made available to them. Our business in America carries on as it was,” he said. Last year about 25 per cent of Ranbaxy’s revenue’s came from the US.

Earlier, the US department filed a motion against Ranbaxy alleging false and fabricated information had been submitted to the Food and Drug Administration. The motion added that allegations from reliable sources and supporting documents indicated a pattern of systemic fraudulent conduct by the Indian drug maker.

On Monday, Ranbaxy filed an eight-page response in the US district court for the district of Maryland, saying, “We are in the process of producing requested supporting documentation for our Abbreviated New Drug Applications to DoJ and believe that the requested documentation will demonstrate that no data manipulation fraud, or dishonesty occurred in those applications.”

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(This article was published in the Business Line print edition dated July 17, 2008)
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