Sun Pharma goes down over 7%.
Shares of major Indian pharmaceutical companies took a hit on Friday after reports came in of a US probe into price collusion.
With 7.1 percent fall, Sun Pharmaceuticals suffered the highest loss on Bombay Stock Exchange. The shares fell to a 28-month low to hit a low of Rs. 654.70 a share—a level last seen on June 27, 2014. Dr. Reddy’s Laboratories Ltd. fell 5.4%, Glenmark Pharmaceuticals Ltd. fell 4.1%, Cadila Healthcare Ltd 4%, Aurobindo Pharma 4%, Lupin Ltd 3.5%, and Natco Pharma 3.3%.
Prosecutors at the Federal Reserve may bring the charges of cartelization against a group of generic drug makers by the end of this year. According to reports, the US Department of Justice started the investigation two years ago.
A dozen pharmaceutical companies, including industry majors Mylan NV and Teva Pharmaceutical Industries Ltd. and Actavis, which Teva bought from Allergan Plc in August, Lannett Co., Impax Laboratories Inc., Covis Pharma Holdings Sarl, Sun Pharmaceutical Industries Ltd., Mayne Pharma Group Ltd., Endo International Plc’s subsidiary Par Pharmaceutical Holdings and Taro Pharmaceutical Industries Ltd, come under the investigation.
The agency is probing whether top level executives of the companies made secret agreements to raise the price of drugs they manufactured. The price of more than two dozen drugs is included in the investigation.
The request for a probe was made by Senator Bernie Sanders and Representative Elijah Cummings. Recently, there was public outrage over inflated drug prices by two companies.
“It is very difficult to prove the price cartelization charges,” a senior analyst with domestic brokerage told Live Mint on condition of anonymity.
“By historical data, generic drugs launched in the US are one-third to one-tenth of the prevailing off-patent drugs with increased competition. Moreover, at a global level, with every company trying to outperform its peers with increased market share at competitive prices, the allegation may not stand the test of times,” he added.