Daiichi-Sankyo has agreed a $500m legal settlement with the US Food and Drug Administration (FDA) for manufacturing violations by its Ranbaxy unit.
The Japanese company, which acquired India-based company Ranbaxy at the end of 2008, has halved its net income forecast for this tax year.
The FDA charges include falsification of data to cover up inadequate and potentially dangerous manufacturing controls at two Ranbaxy factories in India making generic drugs.
To help compensate for the company’s income loss, Daiichi’s board of directors have agreed to cut their individual pay for the next six months, with directors losing between 5% and 30% of their salaries.
The settlement is subject to approval by the US District Court for the District of Maryland, but Daiichi expects that it will resolve all civil and criminal charges raised by the FDA.
The FDA investigation into Ranbaxy’s at Ranbaxy’s Dewas and Paonta Sahib plants in India began in September 2008, when the FDA warned the company that ‘serious manufacturing deficiencies’ could be affecting over 30 generic products.
Problems reported included inadequate protection against cross-contamination of drugs; inadequate control records; and inaccurate written records of the cleaning and use of equipment.
Daiichi acquired Ranbaxy in November 2008.
In February 2009 the FDA halted reviews of drugs manufactured at the Paonta Sahib site, commenting that that there was a “pattern of questionable data raising significant questions”.
Ranbaxy has said that it will address the issues raised by the FDA by improving its manufacturing and data management practices.
Arun Sawhney, CEO of Ranbaxy, commented: “While we were disappointed by the conduct that led to the FDA’s investigation, we are proud of the systematic corrective steps we have taken to upgrade and enhance the quality of our business and manufacturing processes.”
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