Besides the two, Cadila Healthcare Ltd.’s U.S. unit Zydus, Dr. Reddy’s Laboratories Ltd. and Glenmark Pharmaceuticals Ltd. could also be penalised for price fixing, bid rigging and market allocation, the report said.
The U.S. is among the largest markets for several Indian drugmakers, which are already battling eroding margins as competition among generics suppliers has brought down prices. The Department of Justice and the State of Connecticut initiated, along with 45 more states, are probing allegations that companies colluded to keep prices artificially high. The investigation is bringing several more companies and products into its purview, Edelweiss said.
We believe there is a high probability that these companies will be charged penalties, especially after Heritage’s former executives accepted the charges and are assisting the Department of Justice.Edelweiss Research Report
The brokerage said the lawsuit against drugmakers named 18 companies for 15 drugs and the scope could widen.
The defendants may be prosecuted criminally if the allegations are proved, with fines up to twice the amount of gain or loss involved, the research firm said. The precedents, however, indicate that the defendants prefer to settle out of court.