DRL recovers, but settles 2% lower, after it clarifies on lawsuit by US firm

Shares of Dr Reddy's Laboratories recovered to end the day 2.3 per cent lower after falling as much as 6.8 per cent earlier in the day after the drugmaker said it followed all disclosure norms required by the US and Indian regulators.

The stock fell ollowing news reports Los Angeles-based law firm Lundin Law has filed a class action lawsuit against the drug maker on possible violations of federal securities laws.

The scrip was the biggest loser on both the benchmark indices and also on the Pharma index.

The investigation on DRL is related to allegations that certain statements issued by Dr Reddy's were false and misleading concerning the Company's financial performance.

Reacting strongly to the allegations, Dr Reddy's said it "has always adhered to all disclosure requirements of both of the Securities and Exchange Commission (SEC) and stock exchanges, including accounting practices as per the International Financial Reporting Standards (IFRS) and the India Accounting Standards."

The company has no further comment on what might be "advertorial press release by law firms and refute all allegations", it added.

On November 6, 2015, the Company announced that it received a warning letter from the US Food and Drug Administration (FDA) over inadequate quality control procedures at three manufacturing plants in India.