Aurobindo Pharma in the docks

Aurobindo Pharma is amongst the top losers on the BSE since the opening bell. The stock went down over 4% to Rs.665 levels and from there it recovered to Rs.675 currently, though this is also 3% down.

20 states have accused the company and five more drug companies colluding to fix prices that led to the drug prices shooting through the roof.

A civil complaint filed by 20 states accuses these companies of conspiring to artificially inflate prices on an antibiotic and diabetes drug, with executives coordinating through informal industry gatherings and personal calls and text messages. Officials said the case was a small example of broader problems in the drug business.

The six accused companies are Aurobindo, Teva, Maylan, Heritage Pharma, Citron Pharma and Mayne Pharma.

The lawsuit alleges that top executives of the drug companies and their sales executives propped up the prices of the two drugs either by setting the prices or allocating markets.

This is a very serious charge and we will have to wait and watch to see the repercussions. The stock exchanges have asked Aurobindo for a clarification on the same but the company is yet to reply.