UK fraud case puts Ranbaxy in a spot

Drug major had earlier settled a cartel claim with NHS.

Ranbaxy's earlier financial settlement with the National Health Service (NHS) of the UK may provide clinching evidence against the company in the recent Serious Fraud Office' criminal charges, said legal experts tracking the development.

In April 2005 Ranbaxy UK, the wholly owned subsidiary of India's largest pharmaceutical company Ranbaxy Laboratories, had announced its settlement of claims brought against it for alleged anti-competitive cartel conduct in connection with the supply to the NHS of generic drugs between 1996 and 2000.

Under the terms of the settlement, Ranbaxy had agreed on a full and final basis and without admission of liability, to compensate the NHS by payment of £4.5 million and to provide co-operation in the context of the ongoing proceedings.

However, after an independent investigation by the Serious Fraud Office (SFO) into the conspiracy, it had announced that criminal charges against Ranbaxy for the alleged involvement in the cartel and the price fixing.

The SFO had announced that it will bring criminal charges against RUKL for alleged anti-competitive conduct in connection with the supply of penicillin based antibiotics between 1996 and 2000. Four other companies have also been notified that they will be charged.

Besides Ranbaxy UK, there were other four companies including Kent Pharmaceuticals, Norton Healthcare, Regent-GM Laboratories and Generics (UK) and nine company executives associated with these companies during the period, being imposed with criminal charges in the alleged price fixing.

It is learnt that the summons had also been served on the companies, with the exception of Regent-GM Laboratories, which has gone into liquidation.

The companies' officials charged in the allegation are due to attend Bow Street Magistrates Court on April 27 and the companies will also be required to be represented.

However, Ranbaxy, following the SFO announcement, had stated that RUKL has not yet been informed of the substance of the allegations against it nor the evidence upon which they are based and is therefore not in a position to comment.

A Ranbaxy release in connection with the SFO announcement had stated that "The company is not aware of any wrongdoing."

Ranbaxy sources said that the 2005 settlement was on a "without admission of liability" ground as the NHS has been one of the largest customers and the local management in UK was not in favour of a protracted legal battle.

But industry analysts quoting the previous statement of the company said that since the RUKL had agreed to pay the UK agency £4.5 million (about Rs 37 crore) of settlement claims brought against it for allegedly fixing high drug prices of antibiotic - penicillin and ulcer drug, ranitidine during 1996-2000, it may be used as a strong evidence to implicate the company into the SFO charges.