Daiichi Sankyo vs Singh Brothers: How a diary note made the difference

MUMBAI: A daily journal maintained by a top executive helped the Japanese drugmaker Daiichi Sankyo win a high-stakes court battle. In 2016, Daiichi Sankyo secured a favourable decision from a Singapore arbitration court against Ranbaxy scions Malvinder Singh and Shivinder Singh. Daiichi had pressed charges of concealing data and information prior to and following the signing of a record deal to acquire Ranbaxy in 2008. The court ordered Singh Brother to pay up $500 million to Daiichi. India's Supreme Court backed the order.

The revelation of the "journal" is part of a controversial book Bottle of Lies authored by investigative journalist Katherine Eban and released recently.

Tsutomu Une, a senior management representative at Daiichi Sankyo, maintained the journal that was presented as Exhibit A in its case againt the Singh brothers.


Une's notes help establish that the Ranbaxy promoters had for a long time deliberately concealed information of data fabrication related to a number of products granted approvals in the US. Une had played a pivotal role in steering negotiations for the $4.6 billion majority-stake buyout. While Daiichi Sankyo had faced growth challenges, Ranbaxy presented as a good target to what it had then called a "hybrid model" and expand presence in scores of emerging markets.

But Une could not be faulted for the deal imploding as he was kept in the dark on the nature of the USFDA's comprehensive probe. Eban's book, in a chapter titled "You just don't get it", notes:

He (Une) felt driven by the need to make his company whole for the disastrous purchase he'd championed. Within three years (after the deal), Une's carefully written journal would become Exhibit A when Une and a team of lawyers brought their claim of Malvinder's deception….

The information on the false submissions for product approvals was part of a slide deck titled "Self-Assessment Report" or SAR to the Ranbaxy board by the then R&D head Rajinder Kumar. The board did not escalate the issues with the USFDA despite the advice of company lawyers.

The book describes Une as "gentlemanly and formal". He noted crucial details in his journal, mostly expressing doubt and confusion about the way the issues were communicated to him by Malvinder Singh and his deputies in the wake of the USFDA investigations.

Eban extracts from one such anecdote in Une's journal:
As Malvinder continued to play dumb, Une was left with a Delphic riddle of sorts. Why would the FDA deem the entire company dishonest if, as Malvinder claimed, Ranbaxy had done everything right? All Une could do was parse the clues in front of him. He was a careful observer and wrote in his journal about his meetings with Malvinder and his deputies. "What I found out is that they also do not understand the reason AIP was invoked (Application Integrity Policy was invoked - AIP is an extremely strong step by the US FDA to investigate product approval filings). They are not aware that the entire system was deemed suspicious even though it was partially fixed. Malav-San joined [the meeting] at the end. Member's tone changes. They are very much afraid of him.

In another similar reference, Une appeared to have counseled himself for patience in not being able to comprehend anything the FDA probe as he noted: Malav-San's response to requests in connection with the FDA is slow. I understand that it is in the middle of the most celebrated festival but…Patience.

The Japanese executive finally learnt about parallel investigations by the US Justice department from Warren Hamel of Venable LLP, a lawyer appointed by Ranbaxy.

Apart from the foul play at Ranbaxy, Eban's book contains scathing attacks against the production of generic drugs in Indian and Chinese manufacturing sites. It also blames the USFDA for gaps in inspection that could lead to the supply of adulterated medicines to the US.