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ZENITH IS SOLE U.S. MARKETER OF GENERIC CEFADROXIL

Executive Summary

ZENITH IS SOLE U.S. MARKETER OF GENERIC CEFADROXIL following the International Trade Commission's March 15 order barring Biocraft and Purepac from continuing to import foreign-made generic cefadroxil monohydrate (Bristol-Myers Squibb's Duricef). Zenith has been importing and marketing cefadroxil manufactured by Dobfar Industria Chimica Farmaceutica SpA of Milan, Italy, since July, 1989. In a summary of its order, ITC states that the injunction against Biocraft and Purepac "will not exclude the cefadroxil manufactured by Dobfar and marketed by Zenith." Bristol-Myers had sought a general exclusion order against all cefadroxil imports. However, Zenith was not included in the import ban because Bristol-Myers did not name the firm as a respondent in its Feb. 1, 1989 complaint to the ITC, according to the commission opinion accompanying the order. In the March 15 decision, the ITC found that Bristol-Myers' 1985 patent for the antibiotic was likely to be valid and ordered Biocraft and Purepac to stop marketing and importing cefadroxil. The commission also issued a limited exclusion order against their Italian suppliers Gema, Instituto Biochimico Italiano and Institut Biochimique ("The Pink Sheet" March 19, "In Brief"). * Zenith's command of the generic cefadroxil arena may be the result of backfired Bristol-Myers legal tactics, the commission's opinion indicates: "To the extent a limited exclusion order does not provide Bristol with complete relief against all current allegedly infringing imports, the cause lies not in [ITC regulations] or the commission, but in Bristol's own litigation strategy." The opinion notes that Bristol-Myers Squibb neglected to include Zenith in its ITC complaint even though Bristol was aware at the time of Zenith's plans to begin importing Dobfar's cefadroxil. That omission ran afoul of the commission's policy, underlined in the cefadroxil opinion, of "encouraging complainants to include in an investigation all those foreign manufacturers which it believes have entered, or are on the verge of entering, the domestic market." The policy springs from ITC's belief that if companies alleging patent infringement "had the assurance...that they would receive relief against non-respondent entities...they would actually have an incentive not to name such entities that could raise strong defenses to allegations [of infringement] as respondents, or to file only against likely defaulters." Zenith's generic cefadroxil monopoly in the U.S. may not last long. In a separate round of litigation in Newark federal court, Zenith, Biocraft, Purepac and its parent company Kalipharma are seeking a declaratory judgement that Bristol-Myers' patent is invalid and unenforceable. The case is due to be heard March 27-30 before Judge Dickinson Debevoise. The federal court's decision, if decided in the generic firms' favor, would preempt the ITC's decision and allow all U.S. firms with approved ANDAs to continue marketing cefadroxil. Bristol-Myers, for its part, is seeking another decision upholding its patent, damages from all the infringing manufacturers and importers, and an immediate injunction against any further marketing of cefadroxil by generic firms. While awaiting the outcome of the New Jersey patent suit, Zenith is continuing to ship cefadroxil, as is Kalipharma/Purepac. Kalipharma, however, is required by the ITC decision to post bonds equal to 68% of the entered value of its shipments, which will be forfeited in the event the ITC ruling remains in effect. As of March 16, Kalipharma had posted $500,000 in bonds and was reviewing its decision, according to a release by the company. Biocraft has suspended cefadroxil shipments pending the New Jersey decision. Cefadroxil accounted for approximately 23% of Kalipharma's sales for the year ended Nov. 30, 1989, and accounts for approximately 16% of its current sales revenues, the firm's release states. Biocraft and Kalipharma will appeal the ITC decision, in addition to pursuing the case in Newark federal court. If Bristol's patent withstands all remaining appeals, it will not expire until 2002.
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