The US Food and Drug Administration (FDA) has been kind to Ranbaxy, too kind. The $500 million fine that the company has to pay is actually fairly light sentence for what it has done to the generics business out of India. The rapidly growing industry is now under a cloud. The first consequences of Ranbaxy’s actions are already being felt with the FDA issuing an alert banning import of products made at another pharma exporter Wockhardt’s plant in Aurangabad. It could be just the first of many more strictures against India’s generics companies.
Ranbaxy’s is no ordinary misdemeanour. The US department of justice said the company had “pleaded guilty today to felony charges relating to the manufacture of certain adulterated drugs”. Felony is a serious criminal charge.
By accepting to pay a criminal fine and forfeiture and agreeing to settle civil claims, Ranbaxy may have succeeded in effecting damage control. That does not, however, mitigate the seriousness of its actions.
The implications of its guilt cast serious doubts not just over the conduct of generics exporters from India, but over the way business is conducted in this country. First up, it proves beyond doubt that there is no monitoring, by an independent agency, of business practices of wannabe Indian multinationals.
Expecting companies to voluntarily follow all the rules of the book is naiveté.
... Our markets are riddled with companies in every industry segment flouting norms of ethical behaviour. Falsification of data submitted to regulators, is so common a practice that Ranbaxy must have wondered what the fuss was all about. And used to getting away with lax governance and ethics standards at home, no Indian company will automatically turn lily-white merely because it is selling in a developed market.
The Ranbaxy affair also raises issues of executive conduct. ...
Nor does current Japanese owner Daiichi Sankyo, come out clean in all this. For a $4.6 billion deal (to buy a controlling interest in Ranbaxy), the due diligence it did in 2008 appears to have been rather skimpy and inadequate. Or, did it simply choose to turn a blind eye to what by then was publicly known?
But the bitter truth is that we have been too elastic in condoning corruption all around so that it has become deeply and shamefully a part of the ethos of Indian firms. Not all the regulation in the world will stop fraud. Corporate integrity is about culture and sadly ours is a culture where unethical behaviour is condoned and rewarded....
As Indian firms seek to do business abroad, their culture of deceit will come back to bite them.