Daiichi Sankyo claimed it had been deceived when its venture into Indian generic drug manufacturing turned into a regulatory maelstrom that eventually led it to unload Ranbaxy Laboratories at a loss. Now an international arbitration court has agreed.
The Singapore Court of Arbitration has decided the Japanese drugmaker should be awarded $400 million from Malvinder Mohan Singh and Shivinder Mohan Singh, the two lead Ranbaxy investors who sold their stake in the company to Daiichi for $2.4 billion in 2008, the Economic Times reports. It paid about $4.6 billion to get controlling interest.
Daiichi filed the arbitration action against the brothers in 2013, after Ranbaxy pleaded to 7 felonies charges related to manufacturing poor quality drugs and it and Daiichi agreed to a $500 million settlement with the U.S. authorities to settle litigation.
By that point the company had had two plants banned by the FDA from shipping products to the U.S. and fallen under the provisions of a court-ordered consent decree requiring it to have outside auditors track its progress. The actions had begun after authorities were tipped off by a whistleblower that Ranbaxy, among other things, had faked test data on drug tests, showing that products met FDA standards when they did not.
When problems persisted and the FDA banned two more Ranbaxy plants, Daiichi decided it had had enough and agreed to sell the company at a loss to Sun Pharmaceutical in an all stock deal valued at about $4 billion. Sun has pledged to fix Ranbaxy’s quality issues.
- read the Economic Times story