Goldshield, the Croydon-based manufacturer of cheap pharmaceuticals and vitamins, has been warned it is likely to be sued by the Scottish health authorities over allegations it was involved in a cartel to inflate drug prices.
The company, which is being sued by the UK Department of Health and investigated by the Serious Fraud Office, is alleged to have colluded with four companies to illegally bolster the price of warfarin, the widely used blood thinner, between 1997 and 2000.
Goldshield said again yesterday that it vigorously denies all allegations. It has argued in the past that the dramatic rise in the price of warfarin was caused partly by one other supplier shutting down.
Solicitors for Scottish ministers and some of the country's health boards have written to Goldshield and its alleged collaborators demanding damages of £3.3m. Court proceedings could begin this year.
Goldshield is due to meet lawyers for the Department of Health, which is claiming £28m damages from four companies, in the next few months, and has signalled in the past that it would be keen to settle the dispute. However, Ajit Patel, the chief executive, warned investors yesterday to expect the issue to drag on."At the moment, dialogue is pretty minimal. Nothing can be done until everybody has all the facts in front of them. Now that we have the Scottish letter we understand that there may be another party," Mr Patel said.
The UK Government's case centres on presentations to a secret meeting of drug makers which discussed limiting the supply of warfarin and other drugs such as penicillin, and pushing through price rises.
The lawsuit followed the Government's decision to call in the SFO to investigate the price of warfarin. Goldshield's offices and Mr Patel's home were raided in April 2002. Goldshield shares closed down 7.5p at 247.5p yesterday.