The Serious Fraud Office (SFO) will continue a prosecution against Goldshield, the drug distribution group, over allegations involving generic medicines despite a ruling by the House of Lords that price-fixing does not amount to conspiracy to defraud.

The company said that the SFO had decided to amend its case and continue with the prosecution.

The decision to go ahead with the case will be a boost for the SFO after Robert Wardle, its former director, was criticised after dropping an investigation to BAE, the British defence company, and its deals with Saudi Arabia.

The criminal prosecution is part of Operation Holbein, the SFO's biggest case to date, which so far has cost more than £14 million and has required hundreds of staff and its own computer database to sift through millions of files seized in raids.

In total, five companies are accused of price-fixing on NHS drugs under Operation Holbein. The other companies include Ranbaxy, the Indian generic drug giant, and three private businesses — Norton Healthcare, Kent Pharmaceuticals and Generics UK.

Keith Hellawell, the Goldshield chairman, said: “We are clearly disappointed, following the clear decision from the House of Lords, that the SFO still wishes to pursue its case against the company. We will continue to defend our position rigorously.”

The company has already reached financial settlements with health services in England, Scotland and Ireland without admission of liability.

Last June it agreed to pay £4 million to the NHS to settle a claim related to the alleged price-fixing of generic medicine.

The SFO brought criminal charges against Goldshield and the four other companies after raids on 30 homes and offices on April 10, 2002.

Shares in the company fell by 8.77 per cent to a four-month low of 260p this morning.

A preliminary hearing has been set for April 28 at Southwark Crown Court.

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