Dr Reddy’s Laboratories (DRL) has said that a law firm representing a purported investor has filed a class action suit against the company and its key executives in a US court for alleged violations of American federal securities laws.
Dr Reddy’s Laboratories (DRL) has said that a law firm representing a purported investor has filed a class action suit against the company and its key executives in a US court for alleged violations of American federal securities laws. In a regulatory filing, the company said that the case has been filed in the US district court for the district of New Jersey. The lawsuit represents a class of investors who purchased or otherwise acquired the company’s publicly traded shares on the New York Stock Exchange between June 15, 2015, and August 10, 2017, DRL said in a stock exchange filing.
“The lawsuit alleges the company made materially false and/or misleading statements or omissions in connection with its corporate quality system and specifically in connection with a warning letter from the US Food and Drug Administration dated November 6, 2015, and a letter from the Regierung von Oberbayern in Germany dated August 10, 2017. The lawsuit seeks damages to compensate the purported class of investors for a purported decline in the company’s share price allegedly caused by the alleged misstatements or omissions,” DRL said in the filing.
But the company said it has not yet been served with the lawsuit and cannot comment on the specific allegation except to state “the asserted claims to be without merit”. However, the German health regulator has not renewed good manufacturing practice (GMP) compliance certificate of its formulations facility 2 in Bachupally in Hyderabad. In November 2015, the company received a warning letter from the USFDA for violation of GMP at its formulation plant in Duvvada (Andhra Pradesh), and active pharmaceutical ingredients (API) facilities in Miryalaguda in Telangana and Srikakulam in Andhra Pradesh. The Miryalaguda plant was cleared by the USFDA earlier this year but the other two units continue to be under the regulatory lens. The company said that it is expecting re-inspection of Duvvada plant while the plant at Srikakulam is awaiting the regulator’s response as the inspection was over. Recently, Kahn Swick & Foti and Rosen Law Firm, two global investor rights law firms, also filed class action suits. According to their lawsuits, DRL lacked an effective corporate quality system.