Aurobindo Pharma has denied the allegations of "fraud and breach of contract" levelled by bankrupt US drugmaker Aceto Corporation against the company and its director PV Ramprasad Reddy. In a stock exchange filing on Friday, the company said they had been made a party to a litigation proceeding in the US but it had not received a copy of proceeding. "We deny all the contentions and allegations set out and alluded to in the media report," it said. The company added the case appeared to be "devoid of merits and consists of baseless allegations of fraud, negligent misrepresentation and the failure to fulfil its obligations".
Aceto had filed for bankruptcy in the United States in February. Later in May, it failed a case against Aurobindo Pharma, in which it alleged the company knowingly destroyed Aceto's generic pharmaceutical business that it operated through Rising Pharmaceuticals. The company had sought fair compensation and punitive damages from Aurobindo. The petition said: "This action arises out of Aurobindo's calculated and systematic scheme to destroy Aceto's generic pharmaceutical business operated through Rising Pharmaceuticals, which ultimately worked."
The case pertains to a 2016 definitive purchase agreement signed between Aceto, and Citron Pharma LLC and Lucid Pharma LLC -- the two companies for which Aurobindo was supplying half of their drugs -- to acquire their generic products and assets, said an Economic Times report that reviewed the court-related documents.
The deal worth $412 million was signed through Aceto's subsidiary Rising Pharmaceuticals. Both these companies later suffered losses, which, Aceto alleged, had happened due to Aurobindo's abuse of control over the supply chain to gain an advantage in the business. Aurobindo allegedly failed to supply some crucial drugs, thereby causing losses to the US company. The company also had to pay penalty to its largest customer, Walgreens, it alleged.
This led to losses worth $13 million to Rising Pharmaceuticals in 2017 and 2018, alleged Aceto, which sells its products in 10 countries. Additionally, Aceto said Reddy's wife owned a big stake in Citron. But she sold her shares after the deal, which also led to a loss of interest for Citron on Reddy's part, alleged the US company.
Edited by Manoj Sharma