DRL takes a hit as United States law firm faults its results

The United States law firm has alleged that Dr Reddy’s has violated USA federal securities laws. However, DRL’s shares on Thursday fell by 7% before closing down by almost 3% on the BSE over a possible class action suit against the company. Lundin Law pointed to the November 6 announcement of Dr. Reddy’s related to three warning letters from the US FDA over inadequate quality control procedures at its three units in India. Interestingly, Dr Reddy’s American Depository Receipts prices remained stable and surged by 0.13 per cent on Wednesday on the NY Stock Exchange. In FY2015, Dr Reddy’s registered an annual sales of Rs 10,010.94 crore.

US-based law firm Lundin Law, which specialises in securities litigations, is investigating claims against Dr Reddy’s Laboratories for possible violations of federal security laws, which the drug maker has denied.

In yet another setback, Dr Reddy’s Laboratories has been accused by a U.S. law firm of announcing misleading statements concerning its financial performance. There are other law firms trying to do the same.

The news plunged the stock by seven per cent in the morning trade on BSE, but it recovered later in the day by ending the session with a little over 2.5 per cent loss. “Dr Reddy’s has always adhered to all disclosure requirements of both of the Securities and Exchange Commission (SEC) and Indian bourses, including accounting practices according to the global Financial Reporting Standards (IFRS) and the India Accounting Standards”, the company said.

Subsequent to the ANDA filings for Nexium generic by Dr Reddy’s a few years ago, the Dr Reddy’s petition said AZ had sued Dr Reddy’s for patent infringement and during that suit, DRL produced portions of its ANDA and physical samples, which disclosed the ingredients, form, packaging and look of its proposed generic product, including that its proposed capsule was purple.

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