Lawsuit filed against Sun Pharma's US arm

Sun Pharmaceutical Industries’ US subsidiary Caraco Pharmaceutical is facing more trouble in the US. A law firm, Izard Nobel LLP, has initiated a lawsuit seeking class action status against the company in the United States District Court for the Eastern District of Michigan on behalf of its investors.

The law firm said certain officers and directors of Caraco violated federal securities’ laws and interests of the investors by giving misleading information on the business of the company. It has asked the investors to join the suit before September 15 to claim their damages.

On June 25, the US Food and Drug Administration (FDA) had announced that US marshals seized drug products from the company’s three facilities in Michigan at Detroit, Farmington Hills and Wixom. Up to 33 different drugs were seized by the marshals and the FDA banned Caraco from manufacturing and selling these drugs in the US until there is assurance that the firm complies with manufacturing standards. The action followed Caraco’s continued failure to meet the FDA’s current good manufacturing practices (cGMP) requirements.

Caraco failed to disclose its inability to meet the cGMP standards, did not take corrective measures, failed to remedy repeat violations of FDA regulations previously observed and documented by the FDA and this significantly jeopardised the company’s ability to gain FDA approval of pending new drug applications, alleged the petitioner.

Sun Pharma, which earns over 10 per cent of its Rs 4,272 crore turnover from business with Caraco, holds a 76 per cent stake in the company. A Sun Pharma spokesperson did not comment on the proposed legal action against the US arm.