It was a collaboration that would have resulted in a proud first for the Indian pharmaceutical industry, but has landed in a legal tangle instead.

Glenmark Pharma has sought that an arbitration panel of the American Arbitration Association issue an interim order to direct its collaborator Napo Pharmaceuticals of the U.S. to comply with the terms of their collaboration agreement.

Glenmark, along with Napo and Salix Pharmaceuticals USA, had developed Crofelemer, a molecule initially discovered by Napo and used in treatment of diarrhoea in HIV positive patients. Glenmark entered into an agreement with Napo in July 2005, to synthesize Crofelemer and has successfully extracted and stabilised the compound. However, Napo terminated the agreement on November 10.

In a statement, Glenmark said it had filed an arbitration notice against Napo to obtain a declaration regarding the exclusive marketing and distribution rights that were granted to it as part of the collaboration agreement. “The subsequent press release of Napo claiming termination is completely unfounded and seems to be a reaction to the arbitration proceedings initiated by Glenmark. Napo doesn't have any basis to terminate the contract and Glenmark has sought a declaration from the arbitration panel that Napo's claims of breach are unfounded. The same panel will also rule regarding clarification of marketing rights as requested by Glenmark in the previous appeal.''

As per the agreement, Glenmark holds the exclusive rights to distribute Crofelemer in 140 countries while Salix would sell it in the regulated markets of North America, Japan and Europe. In August, Glenmark had filed an arbitration claim against Napo to disallow Crofelemer sales in the 140 countries through relief agencies. Glenmark received $15 million from Salix Pharma towards upgrading its API (active pharma ingredient) manufacturing facility for Crofelemer in July. Once commercialised, Glenmark would pay Napo a royalty of 10-15 per cent of sales while Salix will pay Glenmark the cost plus mark-up for the API, which would be synthesized at its U.S. plant.

Glenmark has the intellectual property (IP) and Salix has invested in conducting the clinical trials but Napo has raised the issue after completion of Phase 3 clinical trials. The next step involves filing an NDA (new drug application) with the US FDA (U.S. Food & Drug Administration), which takes around nine months.

Besides, Glenmark is conducting clinical trials for Crofelemer in cases of Acute Diarrhoea and paediatric Diarrhoea and Phase 2 trials would be completed before March 2012. Glenmark said that it “continues to develop Crofelemer for all indications that we have rights to. Filing timelines will be dependent on the availability of the complete regulatory dossier data. We anticipate such filings to begin in the rest of the world markets in 2012 and hope to obtain approvals by the first half of 2014 as planned.

The regulatory submission is dependent on a complete data package, which includes important elements in addition to the Phase 3 data.

Also, a U.S. dossier serves as an important starting point for customization for the rest of the world markets and in most emerging markets, a developed market approval is also considered obligatory prior to approval.''

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