Securities Class Action Filed Against Taro Pharmaceutical Industries

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Taro Pharmaceutical Industries Ltd. and its CEO and CFO are facing a new class action lawsuit filed by a New York plaintiff who claims he purchased the company’s stock at artificially inflated prices. According to the complaint, the company has issued materially false and misleading statements that misrepresented certain aspects of its financial outlook and competitive landscape. Specifically, plaintiffs allege that “since 2014 Taro has colluded with other pharmaceutical companies to keep the price of generic products artificially high,” as well as engaged in conduct that violated federal antitrust laws. As a result, Taro’s revenue during the class period— July 3, 2014 through September 9, 2016—was produced through illegal activity.

On September 8, 2016, the defendants received grand jury subpoenas from the U.S. Department of Justice’s Antitrust Division looking for records related to Taro’s products, employee records and communications with competitors. When this was made public, Taro stock prices fell almost four percent. More than a month after the DOJ subpoenas were issued, a class action was filed against Taro and other pharmaceutical companies claiming they fixed the prices of Clobetasol, a popular generic drug used to treat skin conditions, since 2014.