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Ranbaxy Hit with Fraud Suit

June 6, 2013
The suit, filed by Supreme Court lawyer Manohar Lal Sharma, argues that making and selling adulterated drugs is a 'heinous crime' and 'amounts to committing murder' and that someone who knowingly does so is liable to be prosecuted under the Indian Penal Code.

NEW DELHI -- More potential trouble loomed for Ranbaxy after a public interest suit was filed in India's top court Wednesday seeking cancellation of the generics giant's license over a tainted drugs scandal.

New Delhi-based Ranbaxy has insisted its drugs are safe after it agreed last month in U.S. court to pay a $500 million settlement over the adulterated medicines it made at two Indian plants in Japan.

"It is not a tale of cutting corners or lax manufacturing practices but one of outright fraud," the suit filed in the Supreme Court said.

A Ranbaxy spokesman said the company had received no documents regarding the case and could not comment.

The suit, filed by Supreme Court lawyer Manohar Lal Sharma, argues that making and selling adulterated drugs is a "heinous crime" and "amounts to committing murder" and that someone who knowingly does so is liable to be prosecuted under the Indian Penal Code.

The petitioner, who in the past has filed a string of suits that he has said are aimed at protecting the interests of the public at large, has also sought an order for prosecution of Ranbaxy's current and former directors and a ban on any further sale of drugs made by the company.

The court said a hearing on the suit could be fixed for next week but no date was immediately specified.

The suit comes after Japanese drug company Daiichi Sankyo, which bought Ranbaxy in 2008, alleged the firm's former owners hid vital information about the US regulatory inquiries at the time of the $4.6 billion purchase.

The charges have been denied by the billionaire Singh family that used to control Ranbaxy as "baseless."

Earlier this week, India's government defended its lucrative generic drug industry which accounts for nearly $15 billion in annual exports as safe and tightly regulated amid the scandal.

India has built a reputation as the "pharmacy to the world" for its production of life-saving generic versions of medicines for poor nations that cost a fraction of those with brand names.

The lawyer alleged Ranbaxy has been supplying adulterated drugs in India as well as other countries and was punishable under the Indian Drug and Cosmetics Act.

The suit charged that the company "knowingly sold substandard drugs around the world, including in India, Africa and the United States."

The US fraud, investigated over eight years, was exposed by a whistle-blowing ex-employee who said Ranbaxy created "a complicated trail of falsified records and dangerous manufacturing practices."

The Japanese firm Daiichi has seen the value of its Ranbaxy purchase plummet since it bought the firm, which earlier this month reported a 90 percent drop in quarterly net profit to 1.26 billion rupees (US$23.3 million) from a year ago.

India's drug regulator -- the Drugs Controller General of India -- is already examining legal documents filed in the United States to see whether Ranbaxy violated any Indian safety norms.

Copyright Agence France-Presse, 2013

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