Sinochem DSM sues Hyundai Pharmaceuticals subsidiary in Netherlands India over patent dispute

A few days ago, the subsidiaries of Sinochem DSM Pharmaceuticals sued Sinopharm Group Wichita Pharmaceutical Co., Ltd. (hereinafter referred to as "Sinopharm Wichita") for patent infringement in the Netherlands and India. On March 27, Hyundai Pharmaceuticals issued a clarification announcement on this, stating that the Netherlands and India are both the markets that Wichita is exploring and have not yet formed effective sales. Moreover, in the two patent infringement cases, DSM Sinochem PharmaceutiCAls Netherlands B .V. (hereinafter referred to as "DSM Sinochem") explicitly requested the national medicine wichita to pay a fine of 50,000 euros and bear the relevant litigation costs only in the indictment of the Dutch case.

Modern Pharmaceuticals carried out a major asset restructuring in 2016 and completed the acquisition of a 100 per cent stake in Sinopharm Group Wichita Pharmaceutical Co., Ltd., with an estimated asset value of 2.57 billion yuan. On March 15, Sinochem DSM Pharmaceuticals announced on its official website that its subsidiaries sued Sinochem Wichita for patent infringement in the Netherlands and India. Sinochem DSM sued Wichita for infringement of its enzymatic amoxicillin patent and demanded a ban on the manufacture, use, import and sale of Wichita amoxicillin API and products containing the API in the Netherlands and India.

In response, Hyundai Pharmaceuticals admitted in its announcement that it was true: Recently, Sinopharm Wichita received a lawsuit filed by DSM Sinochem against the patent infringement of amoxicillin trihydrate produced by Sinopharm Wichita and its production process, requiring Sinopharm Wichita or its lawyers to attend hearings in the Netherlands and India.

However, Hyundai Pharmaceuticals said the product has not yet begun to effectively sell. Up to now, except for samples obtained by DSM Sinochem through other channels, the Netherlands and India are the markets that Wichita is developing and has not yet formed effective sales.

Regarding the possible fines involved, Hyundai Pharmaceuticals said that in the two patent infringement cases, DSM Sinochem only explicitly requested Wichita to pay a fine of 50,000 euros and bear related litigation costs in the indictment of the Dutch case. This amount only accounts for 0.0065 of the latest audited net assets of the listed company (calculated according to the 7.4678 of the exchange rate between the euro and the RMB), which is far from meeting the major litigation standards stipulated by relevant laws and regulations, and the company is not required to fulfill the corresponding information disclosure obligations.

Modern Pharmaceutical believes that this is the main challenge that Chinese pharmaceutical companies have to face in the process of internationalization. After Chinese enterprises and their products have reached a certain market position in participating in the international market competition, it is the normal state of participating in the international competition to deal with the patent litigation of the original monopoly enterprises and initiate patent challenges to them. it is also one of the concrete manifestations that have an impact on the original international market pattern.

The net profit attributable to the owner of the parent company after deduction realized by Sinopharm Wichita in 2016 was 0.179 billion yuan. In the past three years, the overseas sales of amoxicillin raw materials of Wichita have shown an increasing trend year by year. According to the financial report, the sales revenue of Wichita amoxicillin from January to April in 2014, 2015 and 2016 were 0.657 billion yuan, 0.639 billion yuan and 0.151 billion yuan respectively, and the overseas sales revenue of this variety was 0.06 billion yuan and 0.129 billion yuan, and 0.048 billion yuan from January to April in 2016. the proportion of overseas sales is increasing year by year.

So will the above lawsuit affect the sales of amoxicillin in the Netherlands and India?

Hyundai Pharmaceutical announced that the company will assist its subsidiary Sinopharm Wichita to actively respond to various international patent lawsuits, effectively safeguard the legitimate rights and interests of the company and its subsidiaries in the international market, and actively participate in international competition. The final lawsuit will end in the form of an off-stage settlement, with some compensation to the original manufacturer or a delay in the launch of the product.