Ten days after the US Department of Justice (DOJ) announced that Ranbaxy had pleaded guilty and agreed to pay $500 million as settlement for having engaged in manufacturing violations and made false statements to the Food and Drug Administration (FDA) of the United States, the battle lines have been drawn between the new and old managements of the company.
The current management, Daiichi Sankyo, took a controlling stake in Ranbaxy from its previous owners Malvinder and Shivinder Singh in June 2008.
On Thursday (May 22), Daiichi Sankyo issued a statement saying: "Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the US DOJ and FDA investigations. Daiichi Sankyo is currently pursuing its available legal remedies and cannot comment further on the subject at this time."
The Singh family has now issued a rebuttal. A statement "on behalf of the Singh family" says: "The belated suggestion....that information was concealed from and/or misrepresented to Daiichi Sankyo is false and designed to divert attention from Daiichi Sankyo's own failures to protect itself and its shareholders in the negotiations and agreement with the Singh family shareholders of Ranbaxy."
The statement goes on to spell out the background of the deal between the two. "Daiichi Sankyo purchased the Singh family's interests in Ranbaxy in 2008 after a long negotiation process, as is typical of deals of this magnitude, and after conducting full due diligence on the affairs of Ranbaxy. The negotiations on behalf of Daiichi Sankyo were led by Takashi Shoda, Daiichi Sankyo's current Representative Director and Chairman and Dr. Tsutomu Une, Executive Director, who is also the current Chairman of Ranbaxy. They and Daiichi Sankyo were legally advised. At every step of the way during the negotiation process, Daiichi Sankyo and its representatives were made aware of the on-going US FDA and DOJ investigations. They were also given full access to the documents at Ranbaxy pertaining to the US FDA and DOJ investigations."
It adds: "Daiichi Sankyo went into the deal after satisfying itself with its due diligence, with knowledge of the US DOJ and FDA investigations and with the benefit of legal advice... At the request of Daiichi Sankyo, Malvinder (Singh) also agreed to continue at Ranbaxy for a period of five years. Malvinder left Ranbaxy in the middle of 2009. When he left, Tsutomu Une of Daiichi Sankyo sent him a personal letter of appreciation to thank him for the many valuable contributions made by him and the Singh family to Ranbaxy."
The ball is now in Daiichi Sankyo's court.