Indian drug firms reeling under US anti-trust row

Sun Pharma, Dr Reddy's Laboratories have also been dragged to the court by KPH Healthcare services

Indian pharmaceutical companies and their subsidiaries in the United States are facing tremendous pressure as they tackle legalities after being accused of anti-trust activities. Among the allegations are rigging prices of drugs and colluding to delay entry of drugs in the market.
 

This challenge is over and above the pricing wars that regularly pit pharmaceutical companies against each other in courts. In a recent case, filed last week in the court of Pennsylvania, Ranbaxy has been accused of paying its rival Cephalon, to delay the entry of Provigil, a drug used to treat narcolepsy. The charge stemmed from a deal signed by Teva Pharmaceuticals, Mylan Laboratories, Ranbaxy and two other drug makers with Cephalonto. Ranbaxy did not respond to Business Standard’s queries on  the case. 
 

Sun Pharmaceuticals and Dr Reddy’s Laboratories along with two other companies have also been dragged to the court by KPH Healthcare services, which has accused them of colluding with five other drug makers to inflate the price of Ursodiol that is used to treat gall bladder stones and eczema.
 

Sun Pharmaceuticals and Dr Reddy’s Laboratories did not respond to Business Standard’s queries on 

the issue. India’s leading drug maker Sun Pharmaceutical also faces a class action suit against its US subsidiary Taro Pharmaceuticals among other drug makers for artificially inflating the price of generic Clobatesol.
 

“These anti-trust cases will definitely have a bearing on the stocks of these companies. However, the actual impact can only be assessed once the findings and final verdicts are announced in each of these cases,” says Surajit Pal, analyst with Prabhudas Lilladher Private Limited. Before these, a number of states had together filed a case against Aurobindo Pharmceuticals and others for fixing prices of generic drugs used for the treatment of diabetes.
 

The action, led by Connecticut, stems from an investigation that the state began in July 2014 into suspicious price increases of generic drugs throughout the industry. On 1 March, 20 more states joined 

the case.
 

Another case that haunts Sun Pharamceuticals in the US is a lawsuit by New York grocery workers’ union in Pennsylvania federal court, accusing the company of colluding with Mylan for conspiring to raise the price of generic asthma medicine (albuterol sulfate tablets).
 

The US Department of Justice (DOJ) is also pursuing an anti-trust probe against a dozen companies including Indian drug makers Dr Reddy’s and SunPharma along with its US subsidiary Taro. The companies are facing charges of price collusion for over a dozen drugs.