Caraco makes FDA deal as Taro sues owner

Caraco Pharmaceutical has finally reached a deal with FDA. But that didn't stop Taro Pharmaceutical from suing Caraco's majority owner, Sun Pharmaceutical Industries, over the latter's alleged failure to disclose the FDA trouble when it was negotiating to buy Taro. The two companies have been wrangling for some time in court over Sun's 2007 deal to buy Taro at $7.75 per share.

First the FDA deal: Caraco entered a consent decree with the agency, agreeing to restart manufacturing at its now-suspended Detroit facilities only after the FDA and independent experts give the thumbs-up, Reuters reports. And to get that thumbs-up sign, it has to take "measures" it so far declines to specify.

FDA had U.S. Marshals seize Caraco's inventory--about $20 million worth--in June after finding violations of good manufacturing practices. Because of the shutdown, Caraco laid off more than half its Detroit staff. And the plant has been sitting idle ever since, though the company has been distributing other drugmakers' meds on contract.

Well, Taro alleges that Sun never confessed to the FDA actions, saying that the agency crackdown stems from a "long pattern of failure to comply with regulatory requirements," the Wall Street Journal reports. And if Sun were allowed to proceed with its buyout, the regulatory snafus would be harmful to Taro, the company claims. The new suit adds to the tangle of litigation over the initial Sun-Taro deal. We'll have to wait--probably for some time--to find out what the courts decide.

- check out the Caraco release
- get the news from Bloomberg
- see the Wall Street Journal story
- read the article from Reuters