Investor interest in Indian biopharmaceutical company Biocon doesn't seem to be impacted after it has come under radar of the investigation authorities following an alleged bribery case. Shares of Biocon advanced over 4 per cent in the past four trading sessions. On the other hand, the benchmark BSE Sensex added 1.76 per cent during the same period. Moreover, brokerage Nirmal Bang Securities is positive on the biopharmaceutical company with a target price of Rs 364.
The Central Bureau of Investigation (CBI) on Tuesday arrested L Praveen Kumar, Associate VP, Biocon Biologics with which it was being anticipated that the company's image will be tarnished and impact its business. The development took place after the arrest of Joint Drugs Controller S Eswara Reddy for allegedly accepting bribe of Rs 9 lakh, for waiving the Phase 3 clinical trial of the 'Insulin Aspart' injection developed by Biocon Biologics, a subsidiary of the Kiran Majumdar Shaw-run Biocon to control Type 1 and Type 2 Diabetes.
Soon after the development, the company issued a statement refuting all allegations. Biocon in a company statement has refuted the allegations. "We strongly deny the allegations of bribery against the Company and its officials associated with the approval process of one of our products in India," the company said in a statement.
"We strongly condemn any acts of corruption and violation of rules by way of offering or paying bribes or undue favours, either directly or indirectly. We adopt global best practices in corporate governance and business responsibility. Besides our employees, all our consultants, suppliers and partners are also bound by a strong code of conduct that has a detailed clause on anti-bribery and anti-corruption," it added.
Pharmaceutical analysts have said that the bribery case may have a knee jerk reaction on the image and business of Biocon but, the long-term, interest is expected to remain intact. "The bribe development is one that has taken Pharma by storm not because it was unexpected but because it was unexpected at the level that it happened. One of the key achievements of the Modi govt was to root out institutional corruption at senior levels. This development weakens that aim significantly," said Salil Kallianpur, former executive vice president of GSK Pharma, and now a pharmaceutical industry analyst and consumer behaviour specialist.
"Industry insiders and investors will probably not be rattled by the news as was evidenced by Biocon share price being largely unaffected by the charge. The management has denied and issued formal statements to that effect. The media has also largely under played the issue and like most other things, it will blow over soon. The charges are allegations at this point of time and are not proven and hence it is unlikely that we will see any consequences unless the charges are proven," he said.
Biocon clarified that it was seeking waiver of Phase 3 Clinical Trials for Insulin Aspart in India based on the regulatory guidance only. "All our product approvals are backed by science and clinical data," it said.
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