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'Ranbaxy Systematically Violated Good Manufacturing Practices'

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Ranbaxy Laboratories "systemically violated" good manufacturing practices, says the whisteblower whose alert led to a US probe, a day after India's top drugmaker agreed to pay a hefty $500 million to settle charges over its adulterated drugs.

Ranbaxy Laboratories Ltd shares recovered on Tuesday, 14 May 2013 as US fine overhang was seen ending. Shares in Ranbaxy Laboratories Ltd gained 3 per cent, after earlier declining as much as 4.2 per cent, as traders called those falls extensive.

The generic drugmaker slumped earlier, a day after pleading guilty to US felony charges related to drug safety and agreed to pay $500 million in civil and criminal fines.

Read Also: Ranbaxy Pleads Guilty, To Pay $500 Mn In Settlement
Read Also: Ranbaxy Recovers; US Fine Overhang Seen Ending

The generic drugs at issue were manufactured at Ranbaxy's facilities in Paonta Sahib and Dewas in India and included acne drug Sotret, epilepsy and nerve pain drug gabapentin and antibiotic ciprofloxacin.

"Eight years ago, as the Director of Project and Information Management at Ranbaxy, I discovered that the company falsified drug data and systemically violated current good manufacturing practices and good laboratory practices," Dinesh Thakur, a former Ranbaxy executive who is settled in US now, said in a statement.

When Ranbaxy failed to correct problems, he alerted healthcare authorities.

The Generic drugmaker has pleaded guilty to felony charges related to drug safety and will pay $500 million in civil and criminal fines under the settlement agreement with the US Department of Justice.

Thakur, of Belle Mead, New Jersey, will receive $48.6 million from the $500 million that Ranbaxy agreed to pay to settle allegations that the company sold adulterated drugs manufactured at its Paonta Sahib and Dewas plants.

"This case highlights the need for effective regulation that applies to drugs sold in the United States, regardless where they are manufactured," Thakur said. "I am relieved that the government's investigation has concluded."

The settlement is its largest-ever with a generic drugmaker over drug safety, according to the US government. It includes $150 million in payments for a criminal fine and forfeiture and $350 million in payments for civil claims.

Ranbaxy USA pleaded guilty to three felony counts under the Food, Drug and Cosmetic Act -- which prohibits adulterated drugs -- and four felony counts of knowingly making material false statements to the US Food and Drug Administration.

"When companies sell adulterated drugs, they undermine the integrity of the FDA's approval process and may cause patients to take drugs that are substandard, ineffective, or unsafe," Acting Assistant Attorney General for the Civil Division of the Department of Justice Stuart F Delery said.

Ranbaxy admitted it sold batches of drugs that were improperly manufactured, stored and tested and also pleaded guilty to making fraudulent statements to the Food and Drug Administration about how it tested drugs at the two plants.

Commenting on the case, Ranbaxy CEO & Managing Director Arun Sawhney said, "While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all Ranbaxy's stakeholders."

He went on to add that the conclusion of the US Department of Justice investigation does not materally impact the company's current financial sitution or performance.

Ranbaxy had in December 2011 set aside $500 million in anticipation of settlement agreement.

While the company has not sold the 30 drugs identified as adulterated and improperly manufactured in the US, they reportedly continue to be sold in other parts of the world including India.

"To date Ranbaxy has successfully met all obligations under the terms of the USFDA consent decree (entered into in December 2011). We continue to work closely with the USFDA," a company spokesman said.