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Ranbaxy UK arm a problem child?

P.T. Jyothi Datta

NEW DELHI, April 11

IS the pharma major Ranbaxy Laboratories Ltd's (RLL) UK subsidiary turning out to be a problem child for the parent company? May be not so much in monetary terms, but certainly so in terms of its public image, point out industry analysts.

Almost a year ago, the management team at Ranbaxy's UK subsidiary had been sacked for financial irregularities. The event had resulted in the UK-subsidiary's operations coming under the close scrutiny by the Enforcement Directorate in late 2001.

More recently, UK's Serious Fraud Office is probing the UK-subsidiary - for the alleged overpricing of penicillin-based medicines and anti-coagulant warfarin - in its dealings with the National Health Service for the period from July 1997 to December 2000.

Pharma industry watchers told Business Line: "While in terms of sales, the UK operations are not expected to be a drag on the parent company's topline, hitting the headlines for the wrong reasons is definitely expected to affect the company's public image."

Responding to queries on whether Ranbaxy was sending a team to UK for damage control, RLL officials said that they had nothing to hide, as no laws had been broken. "Besides, there is a professional and competent team in place to handle the situation," they said.

Following the trouble that brewed in early 2001, a new team was inducted, with Mr Sugato Bhattacharya as its country head. Mr Bhattacharya was earlier with Ranbaxy's Vietnam operations.

RLL officials had earlier said that RUKL had also recovered the money lost due to the irregularities. The subsidiary was a profit-making company and was estimated to clock $25 million for the year ended 2001, an official said.

The UK subsidiary had posted a sales turnover of $21.6 million for the year ended December 2000, representing a growth of 41 per cent over the previous year.

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