Shares of Ranbaxy Laboratories Ltd fell by around 11% on the Bombay Stock Exchange (BSE) on Monday, the stock?s biggest fall in seven years, on concerns that a US probe against the drug maker may hit the company?s sales there. The probe is on alleged charges of fraud, that allowed ?adulterated and misbranded? medicines to be sold in the US.

The company termed the USFDA charges as ?baseless? and said it would be filing a response later on Monday in the US District Court for the district of Maryland. It said its US business ?is normal? and the Daiichi-Sankyo deal is binding, final, and on track.

The Ranbaxy stock closed at Rs 475.90 on the BSE. Just last month, it was trading at an all time high of Rs 613.70. Daiichi Sankyo, meanwhile, fell 5.5% in Tokyo.

?The company will strongly defend its position. Ranbaxy vehemently denies the allegations contained in the motion that has been filed by the US Department of Justice (DOJ), seeking certain documents. No legal proceedings in the sense of a prosecution have been initiated against the company and Ranbaxy continues to cooperate with the DOJ with regard to the investigation and has agreed to produce the specific documents sought by the motion.? a Ranbaxy statement said.

The head of pharma practice at Angel Broking, Sarabjit Kaur Nangra, says, ?The US government move has, indeed, serious connotations, but none in the short-term. The issue will take its own legal course.?

The episode is also unlikely to affect the deal with Daiichi-Sankyo, since the Japanese company would have done its due diligence, she added. A Ranbaxy spokesperson admitted that an investigation has been under way for approximately three years but no charges have been filed against the company as yet. “The FDA has also gathered over 200 random samples of various products marketed by the company in the US. These products have been independently tested by the USFDA and were found to be complying with all the specifications. Under these circumstances, the company finds that the allegations are baseless,” the spokesperson added.

A company statement added that its business in the US continues to be normal and Ranbaxy ?remains committed to providing high quality generic medicines at affordable prices to its customers and patients in the United States.?

Clearing speculation about possible dark clouds over the Daiichi Sankyo-Ranbaxy deal, the Indian company clarified that the deal with Japanese firm “is binding and final and remains on track.” The suit filed by DOJ against Ranbaxy and its US-based consultant, Parexel Consulting, accuses the company concealed crucial information and forged data to get a favourable judgement on an ongoing investigation by the United States Food and Drugs Administration (USFDA) into the sale of sub-standard drugs in that country.

The suit, filed with the District Court of Maryland, has asked Ranbaxy and Parexel to produce all relevant documents for verification. If Ranbaxy is unable to defend itself, it may have to pay hefty legal damages and suffer reputation loss that could affect its US operations. The US operations contributed around 23% to the company?s turnover in the last fiscal. The investigation is a follow-up of a USFDA inspection of Ranbaxy?s facilities at Paonta Sahib in June 2006, which reportedly found irregularities in manufacturing processes and data & record keeping. The documents demanded by the agency deals with two specific draft standard operating procedures, details on the Toansa plant & the API facilities of Paonta Sahib, validation protocols & reports for two products and certain quality control procedures.