The EU anti-trust regulator suspects that innovator pharma companies could be colluding with their generic counterparts and indulging in unethical practices by deliberately delaying the launch of affordable generic versions of medicines in the European market. This, in turn, could be costing the European exchequers and healthcare systems a fortune, may be to the tune of billions of dollars.

“We had a visit yesterday and we are co-operating with the European Commission,” Anne Baille, managing director of Puteaux, France-based Ranbaxy Pharmacie Génériques, confirmed to the agencies.

In July, European competition commissioner Neelie Kroes in a report on the sector had warned that her office would not hesitate to go after drug makers that cut deals with generics producers to hold back the launch of affordable unpatented version of medicines. According to a European Commission estimate, such delays in generic medicine launches could have resulted in increasing consumers’ bills by 20% between 2000 and 2007.

The EU anti-trust regulator also confirmed the raids without naming the companies and said that the watchdog suspects that these firms could have infringed EU competition rules and abused their dominant market position. Other companies that were raided and confirmed the development include France's Sanofi-Aventis, Switzerland's Novartis and Israel's Teva Pharmaceutical Industries. If the charges are proven against any of the companies, they may have to shell out a heavy sum in fines that would be levied.

Ranbaxy figured among the top losers on the Bombay Stock Exchange on Wednesday and its scrip plunged sharply to close at Rs 399, down 2.12%, since the previous closing.

However, Ranbaxy is not the first Indian generic company to fall into this net of allegation. Earlier, Lupin Ltd, Matrix Laboratories and the UK subsidiary of Unichem Laboratories, Niche Generics, came under the lens of EU's anti-trust investigators for allegedly delaying the launch of a generic version of a hypertension drug into the European market. In 2007, the French generic market was valued at $3.7 billion at retail prices, comprising 8.6% of the total pharmaceutical market. Espicom Business Intelligence report projects that an annual growth of 15% in the generic market will take it to $7.4 billion by 2012, which would account 15.5% of the total pharmaceutical market. Currently, the generic market remains largely under-developed despite an evident increase in sales over the past four years, experts said. Still, France is the third leading generic market in Europe.

Ranbaxy Laboratories consolidated its position in France in the beginning of 2004 when it acquired the fifth largest generic player in the country, RPG (Aventis) SA. Following the acquisition, Ranbaxy became the fifth largest generics supplier in France. Subsequently, Ranbaxy was acquired by the third largest Japanese drug maker Daiichi Sankyo, which bought over a 64% stake in the company for around $4.6 billion last year. A few months down the line, Malvinder Singh left the company and his deputy Atul Sobti took over as the global CEO.