Shares of Sun Pharmaceutical plunged nearly 8 per cent in the early trade on the Bombay Stock Exchange amid reports that a class action law suit has been filed in the US District Court against its arm Caraco.
Shares of Sun Pharma opened weak on the BSE and lost further ground to a low of Rs 1,158, down 7.71 per cent over the previous close.
According to reports, US-based law firm Izard LLP has filed the case on behalf of some of Caraco’s shareholders in a Michigan court on July 17 for allegedly not disclosing adequate information about US regulatory action that hurt its shares.
Earlier on June 25, the US Food and Drug Administration (FDA) had seized all drug products manufactured by generic drug maker Caraco at its Michigan facilities in Detroit following repeated violations of the manufacturing standards.
Following the US FDA’s move, shares of Caraco nosedived 43 per cent to USD 2.39 on the American Stock Exchange. Also Sun Pharma plunged 18 per cent on the BSE the next day.
On the National Stock Exchange the scrip skid 8 per cent to Rs 1,156. It was later quoting at Rs 1,208, down 3.72 per cent on the BSE and with a loss of 3.79 per cent at Rs 1,208.80 on the NSE.
In 1997, Sun Pharma acquired a majority stake in Caraco and subsequently, the two companies entered into a technology transfer agreement.