Sun Pharma
An employee speaks on the phone as he walks out of the research and development centre of Sun Pharmaceutical Industries Ltd in Mumbai.Reuters

Five Indian generic drugmakers have been reportedly named in a lawsuit by 45 US states over price-fixing conspiracy, adding to their existing woes like regulator inspections and pricing pressures in their largest market.

The five companies which are charged mainly for keeping prices of the generic drugs exceptionally high include -- Dr Reddy's Laboratories, Sun Pharmaceuticals, Emcure Pharmaceuticals, Zydus Cadila Pharmaceuticals and Glenmark Pharmaceuticals, Reuters reported.

Soon after the charges, shares of the Indian drug companies tumbled on Wednesday. Dr Reddy's shares fell 2.9 percent to close at Rs 2,360.90 and Sun Pharma dropped 0.9 percent to Rs 548.45.

The lawsuit that came from the attorneys general of 45 states and the District of Columbia have charged 18 companies and subsidiaries and named 15 medicines. It has also brought two individual executives in the spotlight – Rajiv Malik, the president and executive director of Mylan NV and Satish Mehta, the chief executive officer (CEO) and managing director (MD) of Emcure Pharmaceuticals.

According to the states, the drugmakers and executives divided customers for their drugs among themselves with a mutual understanding that each company would have a fixed percentage in the market. They also accused that such companies would also sometimes agree on price surges in advance.

The lawsuit initiated by the state of Connecticut, however, also named major global generic drug-makers like Teva, Sandoz and Actavis, among other companies. More individuals could be added to the list, according to the office of Connecticut Attorney General George Jepsen. 

However, these Indian firms are against the charges filed against them. Emcure said that "it strongly disputes the claims made by the States and intends to forcefully defend against them."

"While we do not comment on ongoing litigation, Glenmark prides itself on conducting its business with the utmost integrity and complying with all applicable laws, rules and regulations," a Glenmark spokesperson said.


Indian pharma companies also face a tight regulatory check by the US Food and Drug Administration (USFDA) that has also become a major concern for the pharmaceutical industry. Major Indian companies such as Dr Reddy's Laboratories and Sun Pharmaceuticals have already faced the ire of USFDA for not following drug manufacturing standards.

Such stringent policy changes came after US President Donald Trump stated that pharmaceuticals companies will have to cut high drug prices and bring manufacturing back to the country to create jobs.

"Going forward, headwinds in pharma are likely to continue in the short to medium term with a possibility of policy changes with new government in US," said a HDFC Securities report released earlier this year.