European antitrust officials raid Ranbaxy’s French unit

Indian drug maker Ranbaxy’ unit in France has been raided by European antitrust regulators.

Ranbaxy business unit raid which comes as part of a series of similar surprise visits being carried out by European anti-trust watchdog to probe certain anti-competitive practices by generic drug makers.

Ranbaxy officials at France-based Ranbaxy Pharmacie Génériques confirmed antitrust taskforce raids.

However, generic drug makers feel that the European anti-trust probe is focused on deals to delay the market entry of cheap generics.

European antitrust taskforce was zeroing in on some settlement deals struck between makers of generic and branded medicines in France.

There was reason to believe certain companies may have infringed EU competition rules prohibiting restrictive business practices and abuse of a dominant market position, the European Commission spokesperson said.

Drug makers use a variety of techniques to delay the introduction of generics for as long as possible. Settlement between branded drug companies and generic firms have resulted in atleast 20% increase in consumer bills between 2000 and 2007, according to the European Commission estimates.

The Brussels-based commission would continue to probe whether the use of patents to delay generics violates antitrust rules.

The commission also conducted raids in France at Sanofi-Aventis SA, Teva Pharmaceutical Industries Ltd. and a Novartis AG unit.

The EU Commission started raids in January 2008 starting with GlaxoSmithKline Plc, AstraZeneca Plc, Sanofi etc. In November, the Commission raided Teva, the world’s biggest generic-drug maker, France’s Les Laboratoires Servier and Slovenia’s Krka Group d.d.

Last year, FDA had banned 30 Ranbaxy form selling 30 drugs, which are manufactured at two of its plants in India, as one such inspections found a number irregularities in good manufacturing practice norms.

Ranbaxy, in which Japan’s Daiichi Sankyo owns about 64 percent, posted huge losses in the quarter ending in March 2009 because of wrong-way bets on foreign- currency hedges as the Indian rupee weakened against the dollar for the fifth straight quarter.

Ranbaxy’s sales in the US, the world’s largest drug market, also dropped 14 percent. The U.S. Food and Drug Administration, on 16 Sept. 2009, blocked the import of more than 30 generic manufactured from Ranbaxy’s Paonta Sahib plant in India. The USFDA also halted reviews of drug applications from it, accusing it of falsifying test results submitted in approved and pending drug applications.

In January 2009, Ranbaxy’s chairman Malvinder Singh is reportedly said the company may shift some generic drug production to the U.S. from India or buy factories approved by the FDA in response to the US import ban.

Ranbaxy’s sales in North America, which accounts for about 27 percent of Ranbaxy’s revenue, fell 7 percent to 4.04 billion rupees in the fourth quarter of financial year 2008-2009. Sales in the U.S. declined to 3.4 billion rupees. Ranbaxy also said sales dropped 14 percent in Europe, and gained 9 percent in India.

Ranbaxy reported 9.19 billion rupees as losses on foreign-currency options before tax. The company also wrote down the value of convertible bonds due 2011 as the Indian currency weakened 3.9 percent against the dollar in the three- month period, its fifth straight quarterly decline.