The U.S. Department of Justice (DoJ) has filed charges against Ranbaxy Laboratories Ltd. for alleged fraudulent conduct. According to the Star Ledger, a newspaper published from New Jersey, U.S. federal investigators filed a motion against Ranbaxy in the district court in Maryland for allegedly falsifying records which led to the sale of generic drugs in the U.S. that did not meet the quality standards.

Ranbaxy, India’s largest drug manufacturer has denied the charges and called them baseless. “No prosecution has been initiated,” a Ranbaxy spokesman said. An investigation has been under way for about three years but “no charges have been filed,” he noted.

Industry representatives have said the case will strengthen the case of the anti-generics lobby campaigning against the cheaper drug versions. Skeptics also feel this could cause the Indian drug makers, who have created a niche for their cheap off-patent medicines, to be hit globally. The U.S. in terms of value is the world’s biggest pharmaceutical market and the most favoured by Indian drug manufacturers buying a quarter of the Rs 28,000 crore worth of drugs exported by Indian pharmaceutical firms in 2007.

The motion filed by the DoJ, says there was evidence to suggest that Ranbaxy and certain employees violated federal laws including the Federal Food, Drug and Cosmetic Act. As a result adulterated and misbranded products have been sold in the U.S. There are also allegations of conspiracy, false statements and healthcare frauds against the company.

If the U.S. government is able to prove its charges it would be a big blow to Ranbaxy as the U.S. market accounted for 23% of Ranbaxy’s total revenue of $ 1.6 billion in 2007.  

Last month, Daiichi Sankyo, a Japanese drug company announced the takeover of Ranbaxy and these allegations could trouble them as well. In the last year and a half Ranbaxy has settled five patent lawsuits with the patent holders out of court, with Pfizer Inc. being the largest with $ 12.7 billion or Rs 54.610 crore for its cholesterol drug Lipitor.