On May 10, 2019, 44 states in the USA filed an amended civil antitrust complaint against multiple pharmaceutical companies, including Mylan NV (rated BBB-/Negative by S&P Global Ratings) and Teva Pharmaceuticals Industries Ltd (rated BB/Negative by S&P Global Ratings), and Sun Pharmaceutical Industries Ltd’s (rated CRISIL AAA/Stable/CRISIL A1+) subsidiary-Taro Pharmaceuticals US, Inc-and other Indian companies such as Cadila Healthcare Ltd (CRISIL AA+/Stable/CRISIL A1+) and Glenmark Pharmaceuticals Ltd (CRISIL AA-/Stable/CRISIL A1+).

In July 2014, the state of Connecticut initiated an investigation on the increase of generic drug prices, which was followed by filing of a class action suit in December 2016 alleging that the companies conspired to artificially fix prices.

The recent amendment to the civil antitrust complaint has widened the scope of the 2016 lawsuit with increase in the number products and parties to it. The lawsuit is filed against various executives and about 20 pharmaceutical companies. CRISIL believes the legal process is likely to be protracted and there is limited clarity at present on the possible impact of penalties, damages, or any out-of-court settlement on the pharmaceutical companies mentioned in the complaint.

CRISIL will continue to monitor the event closely, with specific focus on any potential liability and impact on cash flow in the near to medium term.