(Bloomberg) -- Stocks of Indian pharmaceutical companies, which are collectively the second-biggest suppliers of generic medicines to the U.S., plunged amid mounting concerns about potential pressures on drug prices there after revelations of a Justice Department probe into industry collusion.
An antitrust investigation by the Justice Department spanning more than a dozen companies from around the world is examining whether some executives agreed with one another to raise prices on generic medicines in the U.S., people familiar with the matter told Bloomberg News.
The probe adds to mounting public pressure in the U.S., the Indian pharmaceutical industry’s biggest market, over ballooning drug prices that has already prompted hearings by Congress and criticism from Democratic presidential candidate Hillary Clinton.
Mumbai-based Sun Pharmaceutical Industries Ltd., the only Indian firm to have disclosed receiving a subpoena from the Department of Justice over drug pricing, fell 5.1 percent to 667.95 rupees at 12:34 p.m. in Mumbai. Lupin Ltd., India’s second most valuable drug maker after Sun, fell 4.3 percent to 1,406 rupees, while Dr. Reddy’s Laboratories Ltd., India’s second largest by sales, fell 4.9 percent to 3,102 rupees.
Sun Pharma said via e-mail that it continues to cooperate with the Justice Department in responding to its subpoena. Lupin couldn’t be reached and a Dr. Reddy’s representative didn’t immediately respond.
"Any of the big ones where U.S. is a reasonable chunk of revenues and profits are coming off," Hemant Bakhru, an analyst with UBS Securities India Private Ltd., said by phone from Mumbai. "It heightens the whole debate around drug pricing and what potentially could come out of the new president and whatever they decide to bring in."
Aside from Sun and its Israeli subsidiary Taro Pharmaceutical Industries Ltd., generic drug makers that have received subpoenas include Mylan NV, Teva Pharmaceutical Industries Ltd., Lannett Co., Impax Laboratories Inc., Covis Pharma Holdings Sarl, Mayne Pharma Group Ltd., Endo International Plc’s subsidiary Par Pharmaceutical Holdings and Actavis, acquired by Teva in August.
With the highest number of U.S. Food and Drug Administration approved plants outside the U.S., India accounts for about 13 percent of the U.S.’s generic drug supply, second only to Canada, according to data from the Indian government and the Indian Pharmaceutical Alliance. India’s drug exports were worth $15.5 billion in the 2014-15 fiscal year.