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CMP: Rs808 Target Price: Rs980
EU regulators are investigating anti-trust probe against Servier (patent holder of Coversyl-Perindopril) and few generic companies such as Teva, Lupin Labs, krka and Matrix over suspected agreements which may have blocked the entry of generic Perindopril into the European Economic Area. Lupin management has indicated that they have sold IPR rights and does not infringe EU law. Similarly Servier has also mentioned in their press note that initiation of proceedings does not imply that the commission has proof of an infringement. According to EU antitrust law, if companies found to be antitrust violators, they can subject to be heavy monetary penalties. This may be as large as 10% of their worldwide revenue. However, unlike the US, the EU provides no criminal penalties for individuals who violate anti-trust law.
Since this is a sub-judice matter, it is difficult to take a call which way the judgment goes? However, by the spirit of the matter taken up by the EU authorities and chronology of events leading to out of court settlement raises an iota of doubt about the intention of settlement between innovator (Servier) and Lupin. At the moment, we can not estimate the exact loss; therefore impact on financials can not be assessed. In worst case scenario, this event will lead to one time charges.
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