Hyderabad: Accusing the management of Dr Reddy’s Laboratories (DRL) of misleading investors about material facts, a US-based law firm has initiated a class action suit against India’s second largest drug maker.
“A case has been filed in the US District Court for the District of New Jersey,” the company said in a regulatory filing on Monday. The suit was filed on Friday.
According to Rosen Law Firm, a global investor rights law firm, the class action lawsuit was filed on behalf of purchasers of Dr Reddy’s shares from June 17, 2015 through August 10, 2017.
It claimed that the company had “made false and/or misleading statements and/or failed to disclose that Dr. Reddy’s lacked an effective corporate quality system; and as a result, defendants’ public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.”
“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.
During the period mentioned in the lawsuit, Dr Reddy’s stock value had plummeted from Rs 3,631 apiece to Rs 2,076.90 apiece, representing a fall of 43 per cent in two years. The stock closed at Rs 2,050.00 on Monday.
The lawsuit seeks to recover damages for Dr Reddy’s investors under the US federal securities laws. The petition specifically refers to a warning letter issued by the US Food and Drug Administration on November 6, 2015 and a letter from the Regierung Von Oberbayern in Germany dated August 10, 2017. Dr Reddy’s, however, dismissed “the claims to be without merit”.
