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Dr Reddy’s faces class action suit in US
In a significant development, city-based Dr Reddy’s Laboratories (DRL) on Monday said a law firm representing a purported investor filed a class action suit in a US court against it and its key executives for alleged violations of American federal securities laws. The drug major’s shares fell over two per cent over the latest development.
Hyderabad: In a significant development, city-based Dr Reddy’s Laboratories (DRL) on Monday said a law firm representing a purported investor filed a class action suit in a US court against it and its key executives for alleged violations of American federal securities laws. The drug major’s shares fell over two per cent over the latest development.
Dr Reddy’s in a communique to bourses said that: “The case has been filed in the US District Court of New Jersey.” However, the drug major said it has not yet been served with the lawsuit and can’t comment on the specific allegation except to state the asserted claims to be without merit.
The lawsuit alleges the company made materially false and/or misleading statements or omissions in connection with its corporate quality system and specifically in connection with a warning letter from the US Food and Drug Administration dated November 6, 2015 and a letter from the Regierung Von Oberbayern in Germany dated August 10, 2017.
“The lawsuit seeks damages to compensate the purported class of investors for a purported decline in the company’s share price allegedly caused by the alleged misstatements or omissions,” said Dr Reddy’s said in the filing.
“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,” it added. In a class action lawsuit, one or several persons sue on behalf of a larger group of persons, if a dispute is common to all and the number of affected persons is large.
Meanwhile, the pharmaceutical major recently said the German health regulator has not renewed good manufacturing practice (GMP) compliance certificate of its formulations facility 2 in Bachupally in Hyderabad. Further, in a recent media interaction, Dr Reddy’s said they were expecting re-inspection of Duvvada plant in AP, while the plant at Srikakulam is awaiting the regulator’s response as the inspection was over.
The lawsuit news has impacted the stock on the domestic bourses. The stock fell by 2.01 per cent to end at Rs 2,045.95 on BSE. During the day, it dipped 2.78 per cent to Rs 2,029.70. On NSE, shares of the company declined by 1.85 per cent to end at Rs 2,049.40.
