Shares in drugmaker Ranbaxy rebounded sharply after falling as much as 4 per cent on Tuesday. The stock saw heavy selling in early trade after Ranbaxy said it will pay $500 million in civil and criminal fines under the settlement agreement with the U.S. Department of Justice.
But analysts pointed that Ranbaxy has already set aside $500 million to resolve the potential liabilities in December 2011. Pharma analyst Surjit Pal told NDTV that this is a good news for Ranbaxy as a big hangover is now gone. The only thing to look out now is when will the consent decree resolved, he added.
Ranbaxy shares were up 1.4 per cent at Rs. 445.50 as of 12.05 p.m. after hitting a low of Rs. 421 earlier. The stock outperformed the broader healthcare benchmark, which traded 0.8 per cent higher.
Market analyst Sarvendra Srivastava said Ranbaxy shares have strong support at 420-400 levels.
Ranbaxy settles with U.S. Department of Justice:
Ranbaxy USA pleaded guilty to three felony counts related to the manufacture of drugs at two Indian locations that did not meet safety standards and to four counts of making material false statements. The settlement includes $150 million in payments for a criminal fine and forfeiture and $350 million in payments for civil claims.
In the civil settlement, Ranbaxy has agreed to pay $350 million to resolve allegations that drugs from the two Indian plants did not meet specifications and that false claims were submitted to U.S. government healthcare programs between April 1, 2003 and September 16, 2010.
In 2008, the FDA banned the company from selling about 30 drugs in the United States after it found manufacturing deficiencies at facilities in India. In 2009, the FDA had accused the company of falsifying data and test results in drug applications and halted reviews of drugs made at a plant in northern India.
Ranbaxy, majority-owned by Japan’s Daiichi Sankyo, stopped selling drugs to the U.S. markets while it fixed problems with its manufacturing procedures in the United States and India.
The company has since grappled with other manufacturing problems. In November 2012 it recalled some generic Lipitor, known as atorvastatin, in the United States after certain batches were found to contain glass particles. It has since resumed manufacturing the widely used cholesterol lowering medicine.
Source : NDTV Profit