Ranbaxy, Merck get Rs 840 crore blow in UK

British health dept says firms overcharged for ranitidine supply.

The National Health Service in the UK has sought compensation of at least £100 million (around Rs 840 crore) from Ranbaxy UK and Generics UK, a subsidiary of Merck of Germany, for overcharging for the supply of ranitidine, an anti-ulcer drug, from 1997 to 2000.

According to a report in The Guardian today, this is the biggest claim ever made by the NHS. The Guardian said the NHS had applied to the high court for the compensation.

Ranbaxy UK, a subsidiary of Ranbaxy Laboratories, reported a turnover of $30 million (around Rs 138 crore) in 2002, the last year for which information is available. Ranbaxy Laboratories had reported a profit of $159 million (around Rs 731 crore) in 2003 on global consolidated sales of $969 million (around Rs 4,457 crore).

However, the newspaper did not mention what the claim was against each of the two companies.

Confirming that Ranbaxy UK had received the notice from the NHS, a Ranbaxy spokesperson said the UK government's department of health had indicated that it was not in a position to set out its case in any detail or to serve its claim so as to commence proceedings.

"The company is not aware of any wrongdoing and will defend legal proceedings vigorously (if served)," the spokesperson said, adding that the cumulative sales of Ranbaxy in the UK between 1997 and 2000 added up to only £35 million, significantly below the amount claimed by the NHS.

In December 2003, the NHS had initiated similar proceedings against seven companies, including Ranbaxy UK, for overcharging for the supply of penicillin. In its paper submitted to the high court, the NHS had said these companies had curtailed the supply of the drug to it.

Trouble in UK

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• 2000: Financial irregularities come to light in Ranbaxy UK

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• December 2003. Ranbaxy UK and five others accused of overcharging for penicillin

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• June 2004: Ranbaxy and Merck arm accused of overcharging for ranitidine