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KV TERMINATES BOLAR JOINT VENTURE, SUES FOR $149 MIL.

Executive Summary

KV TERMINATES BOLAR JOINT VENTURE, SUES FOR $149 MIL. in damages in St. Louis federal court. In an effort to retrieve rights to "AB" rated potassium chloride 750 mg and disopyramide phosphate 100 and 150 mg controlled-released capsules, St. Louis-based KV Pharmaceutical announced Feb. 27 that it is terminating a joint venture under which Bolar distributes and markets the products. The generic drug joint venture was established nearly three years ago ("The Pink Sheet" May 18, 1987, T&G-9). In the suit filed Feb. 23, KV is seeking "dissolution and liquidation of the joint venture and related relief" because of Bolar's "impaired...reputation and trade prestige" resulting from the ongoing FDA audit of its ANDA applications and the accompanying "substantial adverse publicity" from allegations of misconduct. KV is asking for $149 mil. in damages, according to Bolar. KV is particularly upset about $187,500, which KV alleges is its "share of packaging charges...inappropriately deducted by Bolar." Under the joint venture, the two firms share profits equally -- KV receives manufacturing royalties and Bolar gets distribution costs. KV stopped shipping the sustained-release potassium chloride and disopyramide phosphate capsules to Bolar on Feb. 26. Noting that there are no regulatory problems associated with the two products, KV said future marketing plans for the two drugs are "undetermined at this time." The two KV drugs accounted for approximately 3.5% of Bolar's 1989 net sales, the company said. Bolar has not released full-year results, but based on nine-month revenues of $108.9 mil., the two KV products were worth nearly $5 mil. in sales during that period. The loss of the KV drugs reduces to five the number of generic pharmaceuticals still currently marketed by Bolar, according to a company list of drugs marketed and recalled. So far, Bolar has had to recall 16 of its own drug products. The recall of nitrofurantoin last fall was followed by those for its generic version of Dyazide and phenytoin on Jan. 31. In mid-February, Bolar announced a recall of 13 additional drugs down to the retail level ("The Pink Sheet" Feb. 19, p. 12). Bolar announced further management changes on Feb. 27 on top of the first-round of executive reshufflings on Feb. 11. The first round brought the downfall of President Robert Shulman and Exec VP Jack Rivers. Bolar said it has "terminated" the employment of VP Operations Charles DiCola and that Arnold Mendell, the director of quality assurance, has resigned. VP Corporate Affairs Jack Kornreich has been named exec VP and continues as general counsel. Additionally, former Assistant Controller David Genzler is the new secretary-treasurer; and Seymour Inkles, named on Feb. 11 as acting head of R&D, is now president, scientific affairs.
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