Drug firm faces 'deception' claim

Ranbaxy's boss recently sold a chunk of the company to a Japanese rival

US prosecutors have alleged that the Indian drug firm Ranbaxy deliberately lied about the quality of its low-cost drugs, including those for HIV.

The US Department of Justice wants India's biggest pharmaceuticals company to hand over key documents relating to drug testing procedures.

It believes they will show the company fabricated test results to gain US approval for its drugs.

Ranbaxy has denied any wrongdoing, saying the allegations were baseless.

'Compliant'

US prosecutors made the allegations in a motion filed with a US federal court in Maryland.

In a statement Ranbaxy said it was fully co-operating with the investigation and would provide copies of the disputed documents.

These products were found to be complying with all the specifications Ranbaxy statement

Ranbaxy was paid millions of dollars by the US government to provide low-cost HIV drugs for President Bush's emergency plan for AIDS relief, which was set up to help AIDS patients in 120 countries around the globe.

Defending the reliability of its drugs, Ranbaxy said the US Food and Drugs Administration had tested over 200 random samples of its products.

"These products have been independently tested by the FDA and were found to be complying with all the specifications," it said in a statement.

The renewed US investigation comes at an awkward time for Ranbaxy.

Last month the Japanese pharmaceutical company Daiichi Sankyo agreed to pay more than $4bn (£2bn) for a controlling stake in the firm.

However, a spokesman for Daiichi Sankyo said its plan would not be affected.

Ranbaxy shares have fallen more than 20% this week on investors' worries that the investigation may affect its sales in the important US market, which is responsible for 24% its earnings.

Long-running investigation

The US government has been investigating Ranbaxy since February 2006 when the FDA issued a warning letter over what it said were manufacturing violations found at a Ranbaxy factory in India.

Since then Ranbaxy has been trying to resolve the issue with US regulators.

In its statement Ranbaxy said "no legal proceedings, in the sense of a prosecution, have been initiated. An investigation has been underway for approximately three years and no charges have been filed against the Company".

Last year, US officials seized documents from Ranbaxy's US headquarters in New Jersey.

Earlier this month Justice Department prosecutors alleged that the company had systematically lied about the makeup of its generic drugs, which include a cheaper version of US drugmaker Merck's cholesterol pill Zocor.

The FDA will only approve cheaper generic drugs if they can be shown to be equivalent to the original drug.

The US investigators have also alleged that Ranbaxy has used unapproved ingredients in its drugs.