A Rajya Sabha nomination and bonds worth Rs 120 crore to BRS

Hetero Group donated about Rs 70 crore to the BRS before and after its founder was nominated to the Rajya Sabha by the party.

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The Hetero Group, consisting of numerous pharma companies operating out of Hyderabad, donated Rs 120 crore through electoral bonds to the Bharat Rashtra Samithi (BRS), which was the ruling party in Telangana until December 2023. And about Rs 70 crore of this amount was spent just before and after the company’s founder and chairman Bandi Parthasaradhi Reddy was chosen as a Rajya Sabha MP candidate by the BRS. 

The bonds were purchased through a series of sister companies with common directors on the board. The companies are Hetero Drugs Limited, Hetero Labs, Hetero Biopharma, Hindys Labs Private Limited, Selmar Labs, Honour Labs Limited, Hazelo Labs Limited, Dasami Labs, and Danika Traders Private Limited.

The group bought bonds to the tune of Rs 140 crore, of which, apart from the amount encashed by the BRS, Rs 15 crore went to the BJP and Rs 5 crore to the Congress.

At the time Parthasaradhi was announced as the BRS’ candidate to the Rajya Sabha and filed his nomination papers in 2022, he had declared assets (including Hindu Undivided Family assets) worth Rs 5,300 crore and personal assets worth Rs 3,900 crore.

Nomination not a surprise?

A total of Rs 120 crore was given through various Hetero companies to the party from April 2022 to July 2023. The bulk of the money in the first tranche in April 2022 – Rs 50 crore – came from three of the group companies – Hetero Drugs, Hetero Labs, and Honour Labs. Exactly a month later, Parthasaradhi was nominated to the Rajya Sabha by the BRS.

His nomination did not come as a surprise to many. A source in the BRS party said that Parthasaradhi had deep ties with BRS chief K Chandrashekar Rao’s family even before the formation of Telangana and that the money was given for the party’s development.

In June 2022, Parthasaradhi was elected unopposed. The very next month, the BRS received another Rs 20 crore in the form of electoral bonds purchased by Hetero sister companies – Hindys Labs (Rs 2.5 crore), Selmar Labs (Rs 10 crore), Hazelo Labs (Rs 2.5 crore), Dasami Labs (Rs 2.5 crore), and Danika Traders Private Limited (Rs 2.5 crore). 

In 2023, Hetero paid Rs 50 crore to the BRS again through its concerns, Hetero Drugs, Hindys Labs, Honour Labs, and Hazelo Labs.  

This mode of payment through multiple entities associated with a larger company is a pattern we have been noticing in the purchase of electoral bonds. At first glance, the amount given by a large company looks small, but on closer inspection, the amounts paid by the sister concerns add up to a substantial sum.

Hetero and political contributions

For Telangana, the Hetero Group is a homegrown success story. Based out of a state that boasts of the largest manufacturing hub for pharmaceuticals and rapid development in the life sciences sector as well, the group’s companies have been given a red carpet treatment. The previous BRS government hoped to keep the momentum of growth intact for the pharma and life sciences industry to achieve a USD 100 billion market by 2025. And Hetero fit the bill perfectly. 

Calling itself the “world’s leading producers of key Active Pharmaceutical Ingredients (APIs) and generic formulations with presence in 140+ countries and backed by 30 years of experience in the pharma sector,” Hetero Healthcare alone recorded a revenue of about Rs 1,823 crore in FY 2022.

Parthasaradhi turned to the BRS at a time when he was facing raids by the Income Tax Department. In October 2021, when the company was raided, tax officials said they seized Rs 142 crore cash and further claimed that they had discovered Rs 550 crore in undisclosed income. The tax officials suspected that the company was inflating the manufacturing cost of its drugs and over-invoicing raw materials and other expenses. Hetero shot into the limelight during the Covid-19 pandemic after the group undertook the development of various drugs such as Remdesivir and Favipiravir.

Following the raid, in February 2022, Hetero gave Prudent Electoral Trust a sum of Rs 10 crore. Trusts are similar to bonds and receive funds from corporations and individuals, and the trust forwards the consolidated amounts to various political parties. At the same time, in the financial year 2022-23, Hetero gave Rs 5.25 crore to the BJP through donations.

Hetero’s political contributions however don’t stop with the BRS. In October 2023, just before the Telangana assembly elections, the BJP received Rs 15 crore from the Hetero group while the Congress received Rs 5 crore.

It's not just electoral bonds.

In 2014, the year united Andhra Pradesh was bifurcated into Andhra Pradesh and Telangana, Hetero gave money across the board to political parties. In the financial year 2014-15, it gave Rs 1 crore to the YSRCP, Rs 1.5 crore to the BRS (then called TRS), Rs 50 lakh to the TDP, and Rs 1 crore to the BJP. 

While Hetero has manufacturing units across the world, in India, its facilities are located mostly in Telangana. It also has units in Andhra Pradesh and Himachal Pradesh.

The company is also no stranger to attention from central agencies. Much before the Income Tax raids, the CBI had also filed a chargesheet against Hetero in a 2012 quid pro quo case, where it had alleged that the company had purchased 75 acres of land in Jadcherla SEZ under the then undivided Andhra Pradesh Chief Minister YS Rajasekhar Reddy and in return, the company had invested in two of Jagan Reddy’s companies. In November 2022, the Supreme Court refused to quash the case against Hetero.

In June 2022, the Telangana High Court cancelled the allotment of 15 acres of land in Hyderabad’s Gachibowli to Parthasaradhi’s Sai Sindhu Foundation Trust to build a cancer hospital.

Hetero and overpricing of drugs

In June 2020, Hetero started the supply of Covifor injection, a generic version of the antiviral drug Remdesivir, and priced it at Rs 5,400 per vial. In April 2021, the cost was cut down to Rs 3,490 after Union Minister of State for Chemicals and Fertilisers Mansukh Mandaviya met pharma company representatives to increase production and reduce costs, as demand had suddenly increased due to the Covid second wave.

In December 2022, Parthasaradhi Reddy raised a question in the Rajya Sabha seeking to know whether the Union government had any special mechanism to monitor the prices of medicines. In response, the Ministry of Chemicals and Fertilisers said that the National Pharmaceutical Pricing Authority (NPPA) under the Department of Pharmaceuticals monitored the prices of scheduled as well as non-scheduled medicines under the Drugs Prices Control Order, 2013 and took action against companies found overcharging consumers.

The following May, the NPPA took three companies – Cipla, Hetero Healthcare and Sandor Medicaids – to task for launching ibuprofen injections without price approval from the Authority. NPPA said the drug formulations were being sold in the Delhi region at anywhere between Rs 26-Rs 75 per vial when the cost of a similar painkiller, diclofenac, had been fixed at Rs 1.63 per vial.

The NPPA’s committee of experts had recommended that the Ibuprofen 100 mg injectable price be fixed at Rs 5.05. While the outcome of this issue is still not clear, in early March this year, the NPPA warned penal action against pharma companies that launched new, combination or new strength and dosage drugs without getting their prices fixed and notified by the Authority. The Ibuprofen injectable has not made it to the list of NPPA pricing documents yet.

A quick search showed Hetero Healthcare’s Inzan Infusion 400 mg, which contains ibuprofen, sold at an online pharmacy at an MRP of Rs 500.

In September 2023, the Drugs Controller in Karnataka started an investigation into pricing violations of anti-cancer drugs by several companies based on complaints by the Bangalore District Chemists & Druggists Association and Suvarna Karnataka Chemists & Druggists Association. One of the companies was Hetero Biopharma, which manufactures and markets Maball 500 mg injection containing Rituximab, an anti-cancer drug. The complaint alleged mass inflation of drug prices.

The two associations complained about exorbitant costs and outrageous profit margins for anti-cancer drugs. The NPPA has fixed its cost at Rs 761.76 for 10 mg. While the outcome of this investigation is not known, a quick perusal of online pharmacies shows the cost to range from Rs 35,826 to Rs 9,700 for Maball 500 mg.

In addition to this, Hetero, like other pharma companies, has faced drug recalls and allegations of substandard drugs. Less than a month after it dropped the price of Covifor in April 2021, Maharashtra banned the injection after 90 of the 120 patients who took it suffered side effects. The batch was recalled by Hetero Drugs.

In March 2022, it was reported that the Appellate Authority had pulled up the Telangana State Pollution Control Board (TSPCB) and 19 pharma companies, including Hetero, for illegally releasing untreated pollutants into nearby waterways and water bodies in Hyderabad, Ranga Reddy, Mahabubnagar, and Medak, which was in turn entering Musi river. The complainant had alleged that the pollution board was not pursuing any action against the pharma companies despite being provided with documentary evidence of violations.

In the larger scheme of investment and global visibility, all these seem to be trifling matters. In October 2022, Hetero, as announced by then Industries Minister KT Rama Rao, would be investing Rs 750 crore in a sterile manufacturing and biologicals unit at Hyderabad’s Genome Valley, which would create 2,000 jobs. In March 2023, the group announced that it would be investing Rs 1,000 crore to expand its facility in Andhra Pradesh over the next two years, creating 3,000 jobs.

A comment has been sought from the Hetero Group and Parthasaradi’s office on the Electoral Bond purchases. This report will be updated if they respond.

This report is part of a collaborative project involving three news organisations – Newslaundry, Scroll, The News Minute – and independent journalists.

Project Electoral Bond includes Aban Usmani, Anand Mangnale, Anisha Sheth, Anjana Meenakshi, Ayush Tiwari, Azeefa Fathima, Basant Kumar, Dhanya Rajendran, Divya Aslesha, Jayashree Arunachalam, Joyal, M Rajshekhar, Maria Teresa Raju, Nandini Chandrashekar, Neel Madhav, Nikita Saxena, Parth MN, Pooja Prasanna, Prajwal Bhat, Prateek Goyal, Pratyush Deep, Ragamalika Karthikeyan, Raman Kirpal, Ravi Nair, Sachi Hegde, Shabbir Ahmed, Shivnarayan Rajpurohit, Siddharth Mishra, Sumedha Mittal, Supriya Sharma, Tabassum Barnagarwala and Vaishnavi Rathore.


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