Dr Reddy’s faces class action suit in US, shares decline 2.8%
MUMBAI: Dr Reddy’s Laboratories Ltd said on Monday that some investors had filed a class action lawsuit against the drug maker in the US District Court of New Jersey, alleging violation of US federal securities laws.
Shares of the Hyderabadbased drug maker fell 2.8% on the announcement in intra-day trading but recouped some of the loss later. Shares fell 2.01% to ₹2,045.95 at the close on BSE.
The lawsuit alleged that Dr Reddy’s made materially false statements and/or misleading statements or omissions related to its corporate quality system, specifically in connection with a warning letter issued by the US Food and Drug Administration (FDA) in November 2015 and a letter from German drug regulacaused tor dated 10 August 2017.
The lawsuit represents a class of investors who purchased or otherwise acquired the company’s publicly traded shares on the New York Stock Exchange between 15 June 2015 and 10 August 2017, Dr Reddy’s said in a stock exchange filing.
The lawsuit seeks damages to compensate the class of investors for a purported decline in the Dr Reddy’s share price by the alleged misstatements or omissions.
The company said it has not yet been served with the lawsuit.
“The company cannot comment on specific allegations in the pending litigation other than to state that the company believes the asserted claims to be without merit. The company will respond to the allegations after it has been served with the lawsuit and as and when it may be required to do so by the court,” Dr Reddy’s said in the filing.
Many large generic pharmaceutical companies such as Teva Pharmaceuticals, Perrigo Co., Impax Laboratories and Taro Pharmaceutical Industries Ltd, a subsidiary of India’s largest drug maker Sun Pharmaceutical Industries Ltd, are facing class action suits in the US, but the outcomes on these litigations are pending.