Pharma Dips over Possible US Probe Into Price Cartelization

Shares of the pharmaceutical companies on Friday (4^th November 2016) fell, with Sun Pharma share price hitting over 28 month low after the news report concluded that the US has begin probe on the possible price cartelization.

Shares of Sun Pharmaceuticals Industries Ltd fell 7.1 per cent, its steepest fall since 21^st December 2015 and hit a low of Rs 654.70 per share—a level last seen on 27^thJune 2014. Dr Reddys share price Ltd fell 5.4 per cent, Glenmark share price fell 4.1 per cent, Cadila share price Ltd 4 per cent, Aurobindo Pharma share price 4 per cent, Lupin share price 3.5 per cent. Natco Pharma share price 3.3 per cent

BSE Healthcare Index fell as much as 3.7 per cent to hit over a 4 month low at 15,221.89 points. BSE’s benchmark Sensex Index fell 0.18 per cent to 27,380.17 points.

According to an anonymous senior analyst with domestic brokerage it is very difficult to prove the price cartelization charges.

He also added that by historical data, generic drugs launched in US are one-third to one-tenth of the prevailing off-patent drugs with increased competition. Additionally, at a global level, with every company trying to outperform its peers with increased market share at competitive prices, this current allegation may not stand the test of times.

US prosecutors are keeping up the heat on generic pharma companies in one sweeping criminal investigation into suspected price collusion, a fresh challenge for an industry which is already reeling from public outrage over the spiraling costs of some medicines.

The anti-trust investigation conducted by the Justice Department, begun somewhere around two years ago, now spans more than a dozen companies and also about two dozen of drugs. The grand jury probe is currently examining whether some executives have agreed with one another to raise prices, and the first charges might emerge by the end of the year, Bloomberg report said.

Though all the individual companies have made various disclosures about the inquiry, they have identified only a handful of the drugs under scrutiny, including a heart treatment and an antibiotic.

Among the drug makers to have received subpoenas are industry giants Mylan NV and Teva Pharmaceutical Industries Limited. Other companies include Actavis, which Teva bought from Allergan Plc in August, Lannett Co., Impax Laboratories Inc., Sun Pharmaceutical Industries Limited, Covis Pharma Holdings Sarl, Mayne Pharma Group Limited, Endo International Plc’s subsidiary Par Pharmaceutical Holdings along with Taro Pharmaceutical Industries Limited, Bloomberg report added.