OraSure Sues To Freeze Prestige’s Purchase Of Wartner Wart Medicines
This article was originally published in The Tan Sheet
Executive Summary
OraSure Technologies is alleging breach of contract against Prestige Brands following the distributor's $31 mil. acquisition of the Wartner cryosurgical wart removal product line Sept. 25
|
OraSure Technologies is alleging breach of contract against Prestige Brands following the distributor's $31 mil. acquisition of the Wartner cryosurgical wart removal product line Sept. 25. Prestige, which distributes OraSure's Compound W cryosurgical wart removers in the U.S. and Canada, said the product-line purchase from Lil' Drug Store of Cedar Rapids, Iowa, would give the company a U.S. market share "approaching 50%" in over-the-counter wart treatments. Irvington, N.Y.-based Prestige plans to integrate the products this year. The value of the deal could be $36 mil. based on $5 mil. in contingent payments. "The addition of a second patented technology to complement the patented technology currently utilized in our Compound W Freeze Off will provide operating flexibility and opportunity to expand the options for consumer home treatment of warts," said Prestige CEO Peter Mann. But Bethlehem, Penn.-based OraSure says its contract with Prestige prohibits the company and its affiliates from selling or acquiring interests in products that compete directly with OraSure's Freeze Off product. The Wartner products - Original for common and plantar warts and Plantar for stubborn plantar warts - are direct competitors, OraSure asserts. "We believe this action clearly violates both the letter and spirit of our distribution agreement with Prestige, and we have every intention of enforcing our rights," OraSure CEO Douglas Michels said, adding that OraSure would consent to arbitration. OraSure says Prestige's overall purchases would be less than 50% of the 2005 level - a $5.5 mil. drop - due to increased competition and a change in Prestige's business strategy. The OraSure-Prestige contract expires at the end of 2007. Prestige contends acquiring the Wartner products -approximately $11 mil. in sales over the last year - does not negatively impact OraSure. Prestige has made purchase-orders from OraSure through mid-2007 and intends to fulfill its obligations. [Editor's note: This story was contributed by "The Gray Sheet," your source for medical device, diagnostics and instrumentation news. For more information call 1-800-332-2181.] |