Merck Generics claims in a writ issued by its subsidiary, Resolution Chemicals, in February 1998 that Chiroscience broke an agreement to supply S-Naproxen, a non-steroid anti-inflammatory drug. MG claims that Chiroscience assigned its supply obligations to an Indian company and later refused to supply S-Naproxen altogether.
It claims it was therefore unable to distribute a new anti-inflammatory drug in tablet form in Canada and the US last year, and wants Chiroscience to pay for the supposed lost sales.
MG declined to give further details of the action. The writ says the group's share of the US and Canadian market for the drug "would have been significantly greater than is now anticipated".
The group is also suing for over pounds 593,000 to cover expenses incurred in seeking an alternative supply. In addition, it is seeking damages and an undisclosed sum to cover associated labour costs. In its annual report published last month Chiroscience says it strongly refutes the allegation and is vigorously defending its position. It denies breaching the agreement. It says it cannot assess the financial impact of an adverse ruling because Resolution's damages have not been particularised. Chiroscience did not refer to the action in 1998's annual report published in May last year.
Resolution Chemicals acquires or manufactures bulk chemicals for distribution to MG's subsidiaries. Chiroscience agreed a supply deal for S-Naproxen with Resolution in May 1996. Resolution claims Chiroscience unexpectedly transferred its obligations to Shasun Chemicals and Drugs, an Indian company, in May 1997 and two months later refused to supply S-Naproxen. It says it had to revise its applications to various regulatory authorities to take account of the switch of supplier.
Chiroscience says Resolution was supportive of the switch and the supplier could have been changed.
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