CORONA, Calif.—Watson Pharmaceuticals said May 18 it will continue to sell the iron deficiency treatment Ferrlecit in the United States until the end of the year after a Swiss arbiter ruled in favor of the company.
In March 2008, Sanofi-Aventis, Ferrlecit’s manufacturer, notified Watson that the two companies’ supply and distribution agreement for Ferrlecit would expire on Feb. 18, according to a filing with the U.S. Securities and Exchange Commission. In addition, Sanofi-Aventis said it was looking for damages of any Ferrlecit sales after the expiration date.
Sanofi-Aventis’ notification, however, did acknowledge Watson’s stance that the agreement was to expire on Dec. 31. According to a Watson SEC filing, the distribution agreement had a duration of 10 full calendar years after Ferrlecit’s FDA market approval, which came on Feb. 18, 1999.
Therefore, the Paris-based Sanofi-Aventis asked for an expedited hearing to resolve the dispute, which Watson agreed to in a response in April 2008.
In a decision favorable to Watson, the Swiss Chambers of Commerce Court of Arbitration ruled that the Ferrlecit supply and distribution agreement between Watson and Sanofi-Aventis will expire on Dec.31. As a result, Watson said it will continue to market and sell Ferrlecit until that date.
Watson said it is in talks with Sanofi-Aventis to extend the supply and distribution agreement beyond 2009. However, if an agreement isn’t reached by Dec. 31, Watson would no longer be able to sell the iron deficiency drug.
Ferrlecit is an injectable iron product used to treat iron deficiency anemia in end-stage renal disease patients, who are on dialysis.
In 2008, Ferrlecit accounted for 12 percent of Watson’s gross profit, according to an SEC filing. That year, revenue from the drug was approximately $145 million, according to a May 18 research note from Michael Tong, CFA, PhD, a senior analyst with Wachovia Capital Markets.
In the research note, Tong wrote that the arbitration result removes “one overhang” from Watson’s shares. “On the other hand, we are looking for additional visibility into WPI’s strategy of ‘weaning’ itself off Ferrlecit beyond 2009,” he wrote.
