SFO steps up inquiry into drugs price-fixing

The Serious Fraud Office is ready to step up its investigation of price-fixing by drug companies supplying the National Health Service, and has signalled it will interview executives by the middle of the year.

The Serious Fraud Office is ready to step up its investigation of price-fixing by drug companies supplying the National Health Service, and has signalled it will interview executives by the middle of the year.

The SFO has been looking into allegations that companies including the quoted manufacturer Goldshield were involved in a cartel to inflate the prices of two popular drugs.

Goldshield, which vigorously denies any wrongdoing, said yesterday that Ajit Patel, its founder and chief executive, and Kirti Patel, another executive director, "may be required to attend interviews some time between April and June".

A spokesman for the SFO said: "We have been gathering information and examining evidential material, and we are now in a mature phase of the investigation where we can focus on how individuals may be able to help us."

The Department of Health called in the SFO in 2002, alleging that six companies colluded to limit the supply and inflate the prices of penicillin-based antibiotics and the blood-thinner warfarin. In April of that year, in one of the biggest single operations carried out by the SFO, more than 200 officers raided 11 homes and 16 business addresses - including Ajit Patel's house and Goldshield's Croydon offices - seizing files and computer equipment.

Six pharmaceutical companies involved in the raids were named by the SFO. They are Generics UK, a subsidiary of the German drugs giant Merck; Kent Pharmaceuticals; Regent-GM Laboratories; Goldshield Group; Norton Healthcare, a subsidiary of the Florida-based Ivax Corporation; and Ranbaxy (UK), a subsidiary of the Indian-based Ranbaxy Laboratories.

Goldshield's shares fell by one-third when the investigation became public, and the company has blamed several subsequent profits warnings on the management distraction caused by the case. As well as the SFO investigation, the company and four other drug makers are being sued for £28m by the Department of Health. Along with three other firms, it alsofaces a £3m lawsuit from the Scottish health authorities.

The company said yesterday: "Goldshield and its executives do not believe that they have acted in an unlawful or improper manner." The company supplied warfarin to the NHS only in the period under investigation, 1997 to 2000. The SFO's case is believed to centre on alleged presentations to a secret meeting of drug makers.

Goldshield shares initially fell 2.5p on yesterday's update, but recovered to end flat at 250p. The company makes and supplies cheap pharmaceuticals and vitamins, and has cut costs heavily in the past three years by moving most of its operations to India.