| Daiichi says open offer on track for August 7.
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| Ranbaxy Laboratories, India's largest pharmaceutical company, had its biggest fall in seven years on the Bombay Stock Exchange on concern that Japan's Daiichi Sankyo may scrap its June 11 announcement to buy the promoter's 38 per cent stake after the US government filed a suit against the company on charges of forging data.
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 The scrip plunged 10.45 per cent despite a statement from Ranbaxy saying the deal is "binding and remains on track".
The stock may, however, see some stability tomorrow with Daiichi saying late evening (India time) that it is committed to the deal.
A spokesperson for Daiichi, Japan's third largest drug maker, told Business Standard that the company "will not change its stance to press ahead with the deal". Daiichi spokesperson Motomi Takahashi said the company will start the open offer process on August 7. The Daiichi stock also slid 175 yen to 2,985 yen on the Tokyo Stock Exchange, the biggest decline since January 22.
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| Though the Daiichi assurance will soothe nerves, investor concern over the possible liabilities arising out of the US Food and Drug Administration (FDA) action was highlighted by brokerage and investment services provider CLSA.
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| The CLSA report said if the FDA is able to prove this forgery, the company may have to stop supplies from its existing plants.
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| CLSA added that the Daiichi deal with Ranbaxy could possibly have clauses under which the deal could fall apart in the case of serious, material change in business prospects.
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| "While nothing is proven till now, if the FDA does manage to prove that Ranbaxy was involved in forging data, there could be material damage to business prospects. The FDA could ask Ranbaxy to file again for a number of ANDAs [abbreviated new drug applications] for which Ranbaxy already has approval and possibly even exclusivities," the CLSA report claimed.
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| CLSA pegged the value of Ranbaxy's US revenues and exclusive marketing rights for off-patent drugs at $516 million and $1.39 billion respectively.
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| An investment banker requesting anonymity said he does not see any immediate business setback for Ranbaxy, but added,"If Ranbaxy were to lose this case, then under the triple penalty clause in the US, the company may have to cough up around $4 billion." |
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