Four years ago, a “License Agreement” announced that Haiyue pharmaceutical and Chongqing Lummy Pharmaceutical Co.Ltd(300006) (300006. SZ) worked together. However, after holding hands for only one year, the two sides finally chose to go to court.
Today, the sales authorization dispute between Haiyue pharmaceutical and Chongqing Lummy Pharmaceutical Co.Ltd(300006) continues to ferment.
On February 18, Chongqing Lummy Pharmaceutical Co.Ltd(300006) announced that the wholly-owned subsidiary Chongqing Laimei Pharmaceutical Co., Ltd. (hereinafter referred to as “Laimei pharmaceutical”) received the civil ruling and civil complaint sent by the court of Changchun new area. Haiyue pharmaceutical sued the listed company and Laimei pharmaceutical, and frozen the bank account of the listed company of 51.4575 million yuan.
It is understood that the above-mentioned cases have not yet been heard.
On February 20, the reporter contacted Chongqing Lummy Pharmaceutical Co.Ltd(300006) . The company said that all transactions carried out by lemy pharmaceutical in this case were real transactions with commercial essence, no illegal sales, and no experience prescription drugs were given. Chongqing Lummy Pharmaceutical Co.Ltd(300006) said it would actively respond to the lawsuit and protect the legitimate rights and interests of listed companies.
the gift experience pretends to be a new incident, which is inconsistent with the current regulations
According to the announcement, according to the civil complaint submitted by Haiyue pharmaceutical to the people’s court, after Haiyue pharmaceutical signed the authorization agreement for tadalafil tablets in China with Laimei pharmaceutical, the two sides negotiated to carry out preferential promotion activities to consumers in the early stage of the market in order to quickly open up the market, In the purchase and sales contract signed between Haiyue pharmaceutical and Laimei pharmaceutical, both parties agreed on the gift proportion of his dalafil tablet experience package.
In the follow-up sales process, Haiyue pharmaceutical believed that Laimei pharmaceutical did not give its tadalafil tablets to consumers, but sold them at a certain sales price, with a cumulative sales of 51.4575 million yuan. Therefore, Haiyue pharmaceutical requested to pay this part of the sales to itself.
According to previous media reports, on August 7, 2020, Haiyue pharmaceutical published on its official website the announcement and supplementary instructions on the counterclaim of Haiyue pharmaceutical to Caimei pharmaceutical, a wholly-owned subsidiary of Caimei Pharmaceutical (I).
In the above description document, Haiyue pharmaceutical said that as a producer, Haiyue pharmaceutical provided additional gifts to Caimei pharmaceutical in the proportion of 1:1 of delivery volume from the perspective of long-term cooperation, which is a behavior exceeding market expectations. It also reflects the importance Haiyue pharmaceutical attaches to the market expansion of tadalafil tablets (xinweige) and its sincerity to Taiwan’s partner Caimei medicine, so as to help Laimei medicine reduce investment and strive for market share with practical actions.
Haiyue pharmaceutical said that in the current contract, the market value of ledalafil tablets (xinweige) of lemy pharmaceutical was more than 33 million yuan. From the results, the profit transfer support behavior of Haiyue pharmaceutical did not promote Laimei pharmaceutical to complete the tasks agreed in the contract, and the market development of Laimei pharmaceutical failed to meet the basic expectations.
However, the reporter did not search the above documents on the official website of Haiyue pharmaceutical on February 20, only found the announcement on the counterclaim of Haiyue pharmaceutical to Caimei pharmaceutical, a wholly-owned subsidiary of Caimei pharmaceutical, and the supplementary announcement on the counterclaim of Haiyue pharmaceutical to Caimei pharmaceutical, a wholly-owned subsidiary of Caimei Pharmaceutical (II).
In this regard, Chongqing Lummy Pharmaceutical Co.Ltd(300006) stressed that all transactions are real transactions with commercial essence, and there are no illegal sales.
A person familiar with the matter told reporters that the doubtful point of the case is that in the purchase and sales contract signed between Haiyue pharmaceutical and Laimei pharmaceutical, it is not expressly stipulated that the delivered goods cannot be exported. The contract only stipulates the gift ratio, but does not stipulate that it can not be exported and should be delivered to consumers free of charge. Therefore, it can be understood as the gift of commercial products.
It is worth noting that giving tadalafil tablets to the public is not in line with the current measures for the supervision and administration of drug circulation.
The measures for the supervision and administration of drug circulation clearly requires that “drug production and trading enterprises shall not give prescription drugs or class a over-the-counter drugs to the public by means of tie-in sale, free drugs by buying drugs, free drugs by buying commodities, etc.”
In November 2021, in the measures for the supervision and administration of the quality of drug handling and use (Draft for comments) (hereinafter referred to as the draft for comments), which was posted on the official website of the State Drug Administration, for retail enterprises, the draft for comments once again stressed that they should not give prescription drugs and class a over-the-counter drugs to the public by buying drugs as gifts or buying goods as gifts.
In this case, tadalafil tablets (xinweige), which are involved in the “gift” dispute, are all prescription drugs on the market in China, and can only be deployed, purchased and used with the prescription of a licensed doctor or a licensed assistant doctor.
the dispute has been for a long time. In the first instance, “play 50 big boards each”
In fact, the two sides have had a “fight” before.
At the beginning of 2019, the domestic drug information of the State Food and drug administration showed that Changchun Haiyue tadalafil tablets were on the market for the first time. The drug, originally developed by Lilly, was approved by the European Drug Administration (EMA) in November 2002 and the US Food and Drug Administration (FDA) in November 2003.
In November 2017, tadalafil tablets (trade name “xinweige”) of Haiyue pharmaceutical was included in the priority review as “drug production application one year before the expiration of the patent”, and was approved for production on February 1, 2019, which was deemed to have passed the consistency evaluation.
In February 2019, Chongqing Lummy Pharmaceutical Co.Ltd(300006) announced that the subsidiary lemy pharmaceutical and Haiyue pharmaceutical signed the licensing agreement for tadalafil tablets in China (hereinafter referred to as the licensing agreement), and obtained the exclusive sales agency right of “tadalafil tablets”, the first new drug imitated by Haiyue pharmaceutical for the treatment of erectile dysfunction (ED) in China.
In addition, the agreement stipulates that if lemy pharmaceutical fails to reach 80% of the agreed annual sales task, Haiyue pharmaceutical has the right to cancel its sales agency right, not return the transfer fee of the sales right, and terminate this agreement.
In May 2020, Chongqing Lummy Pharmaceutical Co.Ltd(300006) a paper announcement announced the termination of bilateral cooperation.
Chongqing Lummy Pharmaceutical Co.Ltd(300006) the announcement said that due to major disputes in the performance process, Changchun Haiyue planned to cancel the qualification of Chongqing Laimei’s exclusive sales agency in China, and Chongqing Laimei filed a lawsuit with Changchun intermediate people’s court.
Chongqing Lummy Pharmaceutical Co.Ltd(300006) said that after the signing of the agreement, 50 million yuan of sales transfer money had been paid in full. Haiyue pharmaceutical plans to cancel the exclusive sales right of Chongqing Lummy Pharmaceutical Co.Ltd(300006) in China on the ground that Chongqing Lummy Pharmaceutical Co.Ltd(300006) fails to meet the task objectives agreed in the contract. Chongqing Lummy Pharmaceutical Co.Ltd(300006) believes that the product specifications of tadalafil tablets obtained by Haiyue pharmaceutical are incomplete, and the production approvals of the other three product specifications have not been obtained; Meanwhile, Haiyue participated in the national centralized drug procurement bidding in January 2020; Other third parties obtained the production approval documents of tadalafil tablets before Haiyue pharmaceutical, which violated the relevant provisions of the agreement. Therefore, it is required to terminate the agreement and return the sales right transfer fee of 50 million yuan.
One month later, in June 2020, Haiyue pharmaceutical released the announcement on the counterclaim of Haiyue pharmaceutical to Laimei pharmaceutical, a wholly-owned subsidiary of Chongqing Lummy Pharmaceutical Co.Ltd(300006) on its official website.
Haiyue pharmaceutical said that in the first year of the license agreement, Laimei pharmaceutical purchased 1.1 million xinweige tablets and only completed 11% of the sales task in the first year of the license agreement, which showed that it had no ability to perform according to its actual behavior. The breach of contract of Laimei pharmaceutical has led xinweige to lose the first mover advantage of the first imitation and caused huge economic losses to Haiyue pharmaceutical.
According to the follow-up announcement of Laimei pharmaceutical litigation, Changchun intermediate people’s Court of Jilin Province tried the above litigation and counterclaim cases together and made a judgment on September 30, 2021. As a result, the two sides were “hit 50 big boards each”.
The court held that Haiyue company failed to complete the first product approval of all four product specifications in China as agreed in the contract, and there was a breach of contract, so it had no right to unilaterally propose the termination of the contract according to the agreed termination right, and its termination notice had no effect on Laimei company. Laimei company needs to complete the agreed annual sales volume for four product specifications, but when there is only one 20mg product specification available for sale at present, Laimei company has not reached the agreed task. After comprehensive analysis of the evidence of the whole case, the court believes that Laimei company has breached the contract.
Therefore, the court decided to rescind the agreement between the two parties; Changchun Haiyue Pharmaceutical Co., Ltd. returned 37.5 million yuan of sales right transfer money to Chongqing Laimei Pharmaceutical Co., Ltd; Chongqing Laimei Pharmaceutical Co., Ltd. compensated Changchun Haiyue Pharmaceutical Co., Ltd. for the loss of profits of 37.5 million yuan.
