With the news of US government's legal probe regarding Ranbaxy Laboratories products, the Ranbaxy scrip declined sharply and closed at Rs 475.90 today as against its previous day close of Rs 531.45 on the Bombay Stock Exchange. The scrip declined by Rs 55.55 or 10.5 per cent from its previous close.

Meanwhile, the company denied the allegations of distribution of adulterated and misbranded products in US and termed the allegations as baseless.

Ranbaxy strongly denies the allegations contained in the Motion that has been filed (not granted) by the US Department of Justice (DOJ), seeking certain documents. No legal proceedings in the sense of a prosecution have been initiated. The company continues to cooperate with the DOJ in regards to the investigation and has agreed to produce the specific documents sought by the Motion. Ranbaxy will be filing a response today in the US District Court for The District of Maryland and will strongly defend its position, the company said.

The company would like to state that an investigation has been underway for approximately three years and no charges have been filed against the company. The FDA has also gathered over 200 random samples of various products marketed by the company in the US. These products have been independently tested by the USFDA and were found to be complying with all the specifications, it said.

Ranbaxy also clarified that the company's deal with Daiichi Sankyo is binding and final and remains on track.

Even the scrip of Daiichi Sankyo, the third largest pharmaceutical company in Japan, which is buying the entire promoter's stake of Ranbaxy and further 20 per cent from shareholders, was also declined on news of US probe. Daiichi has denied the rumour of withdrawing its offer and pointed out the company will go ahead and finalise the deal with Ranbaxy.

According to Pharma analysts, if the decision of the US District Court in Maryland go against the Ranbaxy then the company will incur huge monetary loss as well it will loose its presence in huge market. Any adverse remark of the court will also impact Daiichi's market share and it will have to build its market confidence once again. This will have very long adverse impact on the working.

Ranbaxy's sales in USA and Canada constituted around 26 per cent of its global revenues during the year ended December 2007. The company consolidated its position in this highly competitive market with commercialisation of higher number of products and aggressive filings with the USFDA. Its sales increased by 7 per cent to US$ 419 million in 2007 with US contributing $ 390 million (around Rs 1700 crore).

The company has successfully achieved three major litigation settlements with innovator companies on Para IV FTF products. It is launching three products i.e. Sumatriptan in 2008, Valacyclovir in 2009 and Tamsulosing in 2010, on an exclusive basis.