Analysts feel Ranbaxy's US settlement unlikely to have any impact on Indian pharma industry

The decision in the Ranbaxy case is unlikely to have any impact on the Indian pharma industry. It is more of a company-specific issue. That seems to be the considered view of analysts who have examined the just announced $500 million settlement of the case in the United States.

The US Department of Justice, in a release has stated: "In the largest drug safety settlement to date with a generic drug manufacturer, Ranbaxy USA Inc, a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Ltd, pleaded guilty today to felony charges relating to the manufacture of certain adulterated drugs at two of Ranbaxy's facilities in India and their distribution, the Justice Department announced.

Ranbaxy also agreed to pay a criminal fine and forfeiture totaling $150 million and to settle civil claims under the False Claims Act and related state laws for $350 million."   
 
This concludes an issue that had been dragging for years and perhaps it is time for Ranbaxy to move on and focus on its manufacturing processes and quality issues. But what cannot be ignored is the seriousness of the case and the sheer size of the settlement. Analysts do not recall any Indian generic company ever being asked to pay such a huge fine.

Most analysts Business Today spoke to could not recall any previous case leading to such a large fine, the general view being that in earlier similar cases, fines were not more than $20 million. Second, the involvement of the Department of Justice is certainly serious and therefore important for the company.