Five years after Daiichi buyout, fresh doubts loom over Ranbaxy Gaurav Choudhury, Hindustan Times New

Delhi, September 29, 2013 Repeated run-ins with global drug watchdogs could be just one among many festering wounds that Ranbaxy Laboratories Indian pharmaceutical industrys one-time poster boy is struggling to heal. The company has issued pink-slips to more than 400 employees in the last two months, and sources said lay-off notices were being readied for a similar number of people who are likely to be asked to leave the firm in the next three months. The company, sources said, plans to bring down its employee strength by about 10% from its current base of 14,600 employees over the next 12 months. There are also murmurs of a possible difference between the top management of the companys India operations and those of Daiichi Sankyo, the Japanese parents of the drug firm. Ranbaxy chairman Tsutomu Une was unexpectedly removed from the Board of Daiichi Sankyo in May, days before the company agreed to pay $500 million (about Rs. 2,750 crore) as penalty for selling adulterated medicines in the US and lying about it to authorities. Ranbaxy CEO and managing director Arun Sawhney did not respond to HTs questions for this story. Earlier this month, the US drug regulator, US Food and Drug Administration (USFDA), blacklisted Ranbaxy Laboratories Mohali plantthe companys third factory to face such an import ban effectively stopping shipments of 11 medicines, including the generic version of blood-pressure drug Diovan, produced in the plant. This has raised questions about the violation of hygiene and manufacturing norms even by Daiichi Sankyo, although In May, it had blamed the companys former Indian owners for concealing and misrepresenting critical information about US investigation into the sale of adulterated drugs, and said it will pursue legal remedies. It has now been over 5 years since we exited Ranbaxy as promoter family. We are not involved in the affairs of the company and we would not like to make any comment, Malvinder Mohan Singh, executive chairman of Fortis Healthcare, and former promoter of Ranbaxy, told HT. The Mohali plant was commissioned in 2011, three years after the Japanese drug maker bought Ranbaxy for an eye-popping $4.6 billion (about `20,000 crore then). Analysts said the Mohali plant, billed by the new management as a panacea for Ranbaxys ills with the state-of-the-art facility, accounts for more than half of the 36 abbreviated new drug applications (ANDAs) that Ranbaxy has filed with the USFDA over the past three years. The filings from its US facility in Ohm and Mohali total around $6 billion of current brand value and these new facilities were expected to contribute more than 75% to the firms business.

Ranbaxys version of Diovan, for which it earned 180-day exclusivity rights in the US, was due for launch in September 2012, but its introduction has been delayed. There is speculation that a generic Diovan would directly compete with Daiichis Benicar, its largest-selling drug that had $2.44 billion sales in 2012, whose patent expires in October 2016. Questions are also being raised about why Ranbaxy did not inform stock exchanges about an USFDA inspection in the Mohali plant in September 2012. The company was issued Form 483 for Mohali in 2012. This means there were manufacturing practices that the USFDA had already pointed out ... and the company had time to comply, which it failed to, said Sarabjit Kour Nangra, of Angel Broking. In 2008, the USFDA banned 30 generics produced by Ranbaxy at its Dewas and Paonta Sahib units for gross violation of manufacturing norms. The company had admitted to improprieties. There have been murmurs of discontent among a section of employees over discriminatory human resource practices. Due to the lack of import alert specifics from the USFDA, it is difficult to ascertain the seriousness of the issue of application integrity, Vivek Kumar, analyst at SBI Cap Securities said in a research note.

BS Reporter | New Delhi November 12, 2013 Last Updated at 00:46 IST Daiichi drags Malvinder to Singapore court Malvinder Mohan Singh is accused of concealing and misrepresenting information concerning USFDA and DoJ probes Daiichi Sankyo the Japanese parent of Ranbaxy Laboratories, has dragged the latters previous promoter Malvinder Mohan Singh to a court in Singapore for concealing and misrepresenting critical information relating to the US Food and Drug Administration (FDA) and Department of Justice (DoJ) investigations at the time of the purchase, sources say. In 2008, Daiichi Sankyo had bought the entire 34.82 per cent stake in Ranbaxy from its promoters, Malvinder Mohan Singh and family, for $4.2 billion. Currently, Singh is executive chairman of Fortis Healthcare. According to a source privy to the development, Daiichi Sankyo has claimed damages arising from its settlement with US authorities. A detailed e-mail query sent to Singh on Saturday did not elicit any response till the time of

going to press. On Sunday, his office told Business Standard he was travelling and could not be reached. Maintaining its stand of pursuing legal options against former Ranbaxy shareholders, Daiichi Sankyo said, As Daiichi Sankyo announced on May 22, 2013, there is no further comment on this matter. On May 22, the company said it believes certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the US DoJ and FDA investigations. Currently, Daiichi Sankyo is pursuing available legal remedies and cannot comment further on the subject at this time. According to the source, the agreement signed between Daiichi Sankyo and the former promoters of Ranbaxy in 2008 has a provision that any future arbitration related to the deal will be pursued in Singapore, in accordance with commercial arbitration rules. It also prohibited either party from disclosing any information related to the legal proceedings while the arbitration was underway, the source said. Ranbaxy, which pleaded guilty in the US of making fraudulent statements related to testing of drugs for securing approvals, had to pay a fine of $500 million to the authorities in that country. Daiichi on April 29, about a month before it first indicated it was evaluating legal action against Ranbaxys former shareholders, had filed five caveats in the Delhi High Court, seeking to prevent a stay order being issued against it without being heard. Corporate war imminent Industry observers say the litigation between the current owners of Ranbaxy and its former promoters is likely to be stretched and might become a major corporate war. Daiichi Sankyo is a big international player and if they are feeling cheated, they will not let it go so easily. Ranbaxy was one of the costliest deals of the time and Daiichi had to pay a hefty penalty of $500 million for what they believe were misdeeds of the past. The reputation damage is over and above all this, says a pharma industry veteran.

Singh brothers of Ranbaxy Laboratories concealed facts while selling stake: Daiichi Sankyo ARUN KUMAR, ET Bureau Nov 11, 2013, 06.40AM IST NEW DELHI: Japanese pharmaceutical company Daiichi Sankyo has accused Malvinder Mohan Singh and Shivinder Mohan Singh of concealing and misrepresenting facts at the time of its $2.4-billion purchase of a controlling stake inRanbaxy Laboratories in 2008 from the brothers. The accusation was made in an arbitration case filed inSingapore, said three people familiar with the development. Daiichi has sought compensation for losses arising from the $500million settlement that Ranbaxy was forced to reach with the US Department of Justice in

May over accusations that the company faked test results to get approval from theFood and Drug Administration for its medicines. he US subsidiary of Ranbaxy pleaded guilty to seven felonies relating to the manufacture and distribution of certain adulterated drugs made at units in India and agreed to pay the money to settle criminal and legal suits. The company had said on May 22 it may initiate legal steps against the Singhs, who have focused on finance, healthcare and other areas since exiting Ranbaxy. Daiichi's case may be difficult But a person aware of the purchase terms said Daiichi's case may face challenges because it doesn't necessarily indemnify the new owners. "It would be interesting to see the outcome of the arbitration given that Singh brothers had not indemnified the Japanese buyers for such eventualities," he said. A review of the share purchase agreement (SPA) executed on June 11, 2008, appears to indicate that this may indeed be the case. A Right to Information filing by Hemant Shripad Shetye had forced the Securities & Exchange Board of India to provide a copy of the SPA, otherwise a confidential document. Apart from this, the company's troubles were public knowledge at the time. The FDA had begun inspections and searched various units of Ranbaxy in 2007. It had banned 30 generic drugs produced by Ranbaxy at its Dewas and Paonta Sahib units, citing gross violations of approved manufacturing norms. The Singh brothers and Daiichi didn't respond to questions. In any case, buyer and seller are prohibited from disclosing anything in relation to arbitration proceedings under the SPA. Under the agreement, all disputes are to be resolved by the International Chamber of Commerce in accordance with commercial arbitration rules. "The arbitration proceedings and the award shall not be made public without the joint consent of the disputing sides and they shall maintain the confidentiality of such proceedings and the award," the SPA states. Other parts of the SPA seem to be worded in a way that would make it difficult to pin down responsibility. According to a representation by Ranbaxy in the SPA, "To the knowledge of the company, there is no event or situation that has not been disclosed to the buyer (Daiichi) and its representative since the accounts date and which could have a material adverse effect. For the purpose of this, the 'knowledge of the company' shall mean the knowledge of founder 1 (Malvinder Mohan Singh) without any obligation of founder 1 to make any due enquiry." This appeared to be an unusual practice for an M&A, said a senior investment banker with a foreign bank who's been involved in several large transactions.