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Business News/ Companies / Sun Pharma arm gets summons from US antitrust division
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Sun Pharma arm gets summons from US antitrust division

DoJ seeks documents from Sun Pharma unit relating to corporate and employee records, generic pharmaceutical products and pricing among other things

For the year 2014-15, Sun Pharma’s sales in the US were $2.2 billion and accounting for 50% of total sales. Photo: Hemant Mishra/MintPremium
For the year 2014-15, Sun Pharma’s sales in the US were $2.2 billion and accounting for 50% of total sales.
Photo: Hemant Mishra/Mint

Hyderabad/Mumbai: India’s largest drug maker Sun Pharmaceutical Industries Ltd said its US arm has received a summons from the antitrust division of the US department of justice, requiring it to appear before a grand jury there.

The company did not elaborate on the reasons for the summons.

“One of the company’s US subsidiaries, Sun Pharmaceutical Industries Inc. (SPII), has received a grand jury subpoena from the United States Department of Justice (DoJ), anti-trust division," the company said in a BSE filing.

DoJ has sought documents from SPII and its affiliates relating to corporate and employee records, generic pharmaceutical products and pricing, communications with competitors and others regarding sales of generic pharmaceutical products and certain other related matters, the company said in the BSE filing on Saturday.

The company said its unit was in the process of responding to the subpoena, adding that “the outcome of the above-referred inquiry is unlikely to have any material adverse impact" on its operations or financial results.

A Sun Pharma spokesperson declined further comment to Mint.

The US department of justice’s antitrust division usually deals with anti-competitive business practices.

At least two analysts Mint spoke to said they are waiting for the company to provide further details.

Sun Pharma is due to announce its fourth quarter results on Monday.

It was not immediately clear if the subpoena is related to an alleged steep increase in the price of generic drug Doxycycline Hyclate.

Sun Pharma along with Mylan NV, Allergan Plc and UK-based Hikma Pharmaceuticals were alleged to have increased the price of that drug by 80 times between October 2013-April 2014.

Mylan said it had received subpoena from the antitrust division of the US Department of Justice seeking information relating to the pricing and marketing of its generic doxycycline antibiotic products in December.

Allergan said in August it had received a subpoena from the antitrust division relating to generic products and communications with competitors. It did not disclose the names of the drugs involved.

US senator Bernie Sanders and Democratic representative Elijah Cummings opened an investigation in October 20114 into 14 drug companies, including Sun Pharma, over price increases of generic drugs.

“The US market is an open market and prices can be determined by the industry unlike India where there is a price control imposed. In this case, possibility is that Sun’s competitors might have complained over suppressing competition with tweaking the product availability or overpricing, though can’t say specifically as details are not yet available," said a Mumbai-based pharmaceuticals analyst on condition of anonymity.

For the year 2014-15, Sun Pharma’s sales in the US were $2.2 billion and accounting for 50% of total sales.

Taro Pharmaceutical Industries Ltd, the US subsidiary of Sun Pharma has posted a weak result for the fourth quarter of FY16. Net sales of Taro stood at $265 million, increased 8.6%, on relatively flat volumes. Net income attributable to Taro was $115 million compared to $152.3 million, while its net income was unfavourably impacted by an $80 million fluctuation in foreign exchange (FX), Taro said in its statement.

Presently, Sun Pharma is world’s 5th largest generic drug maker with a sales of $4.6 billion (FY15) after Teva Pharmaceutical Industries Ltd, Novartis International AG, Mylan Laboratories Ltd and Allergan Plc.

In the US, Sun Pharma has more than 435 approved products while 156 ANDAs (abbreviated new drug applications) are awaiting approval, according to a February 2016 investor presentation.

In 2013, Sun Pharmaceuticals had to pay $550 million (around 3,190 crore then) to Pfizer Inc. as part of a patent dispute settlement in the US, following Sun’s launch of generic copies of Wyeth’s (part of Pfizer) patented acid reflex brand Protonix.

Although the company did not elaborate on the reasons for the summons, such a grand jury subpoena by the department of justice’s antitrust division is usually issued to check anti-competitive practices. While stating that SPII is currently responding to the subpoena, Sun Pharma said it “is of the opinion that the outcome of the above-referred inquiry is unlikely to have any material adverse impact on the consolidated operations or consolidated financial results of the company".

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Published: 28 May 2016, 03:25 PM IST
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