Companies to go to court over drug licensing contracts

People in Illinois may not be aware that when small companies develop a new drug, they may not have the financial resources to continue developing the drug. In order to get around this obstacle these small companies will sign drug licensing contracts with larger, often more established, companies that do have the financial and business acumen to complete the development of a drug and then market it. This is what one small drug company did with a new drug it partially developed.

Napo Pharmaceuticals had a partially developed drug that it licensed to Salix Pharmaceuticals back in 2008 in order to commercialize the drug. This was to include completing its development, seeking FDA approval and then marketing the drug if the FDA approves it. Napo Pharmaceuticals says it disapproves of the slow progress Salix Pharmaceuticals is making.

In its breach-of-contract claim filed in New York, Napo alleges that Salix has unnecessarily delayed the completion of the commercialization process for a drug now called Fulyzaq. The drug was given FDA approval back in Dec. 31, 2013, yet the drug has still not been introduced to the market. Napo believes Salix has not moved the drug into mass production in order to distribute it to patients it would benefit. Salix says that it has substantially increased its marketing budget partly because of Fulyzaq.

Napo has filed its suit for monetary damages and the right to sever its ties with Salix. There may be small businesses in Illinois that have something similar to these drug licensing contracts with larger companies. If a small business believes the larger company has somehow slighted them, and the dispute cannot be resolved satisfactorily, filing a lawsuit may be the only way to settle the contract dispute.

Source: bizjournals.com, Contract dispute between Raleigh drug developer and its partner will go to court, Jason deBruyn, Nov. 4, 2013

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