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Cipla mum on why it suspended CEO

Aug 16 2012 13:06
Reuters

Cape Town - South African drug maker Cipla Medpro [JSE:CMP] said on Thursday the suspension of its chief executive was not based on any major financial wrong-doing, even as nervous investors sent its shares sharply lower.

South Africa's third-largest pharmaceutical firm said late on Wednesday it had suspended company founder Jerome Smith pending an investigation into "serious allegations", without identifying the charges.

Chairperson Sbu Luthuli declined to give details at the company's earnings presentation in Cape Town on Thursday.

"We can't disclose the nature and specifics, but I want to assure everyone that the matter is serious. But from a monetary value, if you look at the company, it is not material," he said.

"I want you to be at ease. You are not going to think that suddenly there is R100m missing from the company."

Investors nonetheless sent shares of the $450m drug maker sharply lower.

The shares were down 5.8% at R7.80 at 12:19, after earlier falling more than 10%.

Luthuli said the investigation would not impact Cipla Medpro's supply agreement with Indian drug giant Cipla Ltd.

Cipla Medpro has appointed Johan du Preez, an independent non-executive director, as acting chief executive, pending the outcome of the investigation.

Separately, the company reported a 31% increase in first-half earnings on Thursday.

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