Geneva Pharmaceuticals Tech. v. Barr Laboratories
| Decision Date | 10 May 2002 |
| Docket Number | Nos. 98CIV861 (RWS), 99CIV3607(RWS).,s. 98CIV861 (RWS), 99CIV3607(RWS). |
| Parties | GENEVA PHARMACEUTICALS TECHNOLOGY CORP., (as successor in interest to Invamed, Inc.), Plaintiff, v. BARR LABORATORIES, INC., Brantford Chemicals Inc., Bernard C. Sherman, Apotex Holdings Inc., Apotex Inc. and Sherman Delaware, Inc., Defendants Apothecon, Inc., Plaintiff, v. Barr Laboratories, Inc., Brantford Chemicals Inc., Bernard C. Sherman, Apotex Holdings Inc., Apotex Inc. and Sherman Delaware, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Solomon, Zauderer, Ellenhorn, Frischer & Sharp, New York, NY, Harry Frischer, Colin Underwood, Jennifer Scullion, of counsel, for Plaintiff Apothecon, Inc.
Frederick R. Dettmer, New York, NY, for Plaintiff Geneva Pharmaceuticals.
Winston & Strawn, Chicago, IL, Kurt L. Schultz, Brant C. Weidner, Jay L. Levine, John J. Tully, Jr., Gregory C. Vamos, Richard A. Duda, Monika Blacha, of counsel, for Defendant Barr Laboratories.
Lord, Bissell & Brook, Chicago, IL, Michael J. Gaertner, David G. Greene, Douglas M. Chalmers, John F. Kloecker, Stacey Y. Dixon, of counsel, for Defendants Brantford Chemicals, Inc., Bernard C. Sherman, Apotex Holdings Inc., Apotex Inc. and Sherman Delaware Inc.
Defendants Barr Laboratories, Inc.; Brantford Chemicals, Inc.; Bernard C. Sherman; Apotex Holdings, Inc.; Apotex Inc.; and Sherman Delaware Inc. have moved for summary judgment to dismiss the complaint of plaintiffs Geneva Pharmaceuticals Technology Corp. (as successor in interest to Invamed, Inc.) and Apothecon Inc. alleging violations of the federal antitrust laws, the New York antitrust laws, and numerous related state law claims.
For the foregoing reasons, that motion is granted in part and denied in part.
Plaintiff Geneva Pharmaceuticals Technology Corp. ("GPTC") is a New Jersey corporation with its principal place of business in New Jersey. GPTC is in the business of developing, manufacturing and marketing generic pharmaceuticals. GPTC is a wholly owned subsidiary of Geneva Pharmaceuticals, Inc. ("Geneva"), which itself is a member of the generics sector of Novartis AG, the Austrian pharmaceutical company. Until its purchase by Geneva in December 1999, GPTC was known as Invamed, Inc. ("Invamed").
Plaintiff Apothecon, Inc. ("Apothecon") is a Delaware corporation with its principal place of business in New Jersey. Apothecon is a wholly-owned subsidiary of the Bristol-Myers Squibb Company ("BMS"), one of the world's leading pharmaceutical companies, and is engaged in the business of developing, manufacturing and marketing generic pharmaceuticals. Apothecon's approximate annual sales are $600 million.
On June 28, 1996, Invamed and Apothecon entered into an exclusive five-year Development and Supply Agreement in connection with manufacturing and marketing a number of generic pharmaceuticals, including warfarin sodium, a generic version of the drug Coumadin® made by DuPont Pharmaceuticals Company ("DuPont"). Plaintiffs allege that this arrangement constituted a joint venture, in that the parties agreed to share profits and loss and referred to each other as "partners" and to the agreement as a "joint venture."
On December 15, 2000, Geneva's affiliate Biochemie U.S. acquired Apothecon's portfolio of commodity generic pharmaceutical products, and Geneva gained the right to sell (under the Geneva or Apothecon label) all of the products, including warfarin sodium, that had been previously supplied to Apothecon by Invamed. On June 7, 2001 BMS agreed to acquire the drug business of DuPont, including Coumadin®, for $7.8 billion in cash.
Defendant Barr Laboratories, Inc. ("Barr") is a New York corporation with its principal place of business in New York. Barr is engaged in the business of developing, manufacturing and marketing generic pharmaceuticals.
Defendant Brantford Chemicals, Inc. ("Brantford") is a Canadian corporation with its principal place of business in Brantford, Ontario. Brantford is engaged in the business of manufacturing and marketing active pharmaceutical ingredients ("API"), chemical compounds used in the manufacture of pharmaceuticals. Brantford was known as ACIC (Canada) ("ACIC") until 1996.
Defendant Apotex Inc. ("Apotex") is a Canadian corporation with its principal place of business in Weston, Ontario. Apotex is engaged in the business of researching, manufacturing and marketing both generic and branded pharmaceuticals. Apotex does not currently manufacture or market pharmaceuticals for sale in the United States.
Defendant Apotex Holdings, Inc. ("Apotex Holdings") is a Canadian holding company with its principal place of business in Weston, Ontario.
Defendant Dr. Bernard C. Sherman ("Sherman") is an individual residing in Canada. Sherman founded Apotex in 1974 and is the chairman of its board of directors. Sherman is also a member of the board of directors of Barr1 and the president of Apotex Holdings.
Defendant Sherman Delaware, Inc. ("Sherman Delaware") is a Delaware holding company with its principal place of business in Delaware.
Sherman owns 99% of the voting shares of Sherman Holdings Inc. ("Sherman Holdings"). Sherman and members of his family are also the beneficiaries of the Bernard and Honey Sherman Trust ("Sherman Trust"). Sherman Holdings and the Sherman Trust together own approximately 100% of the voting shares of Shermco Inc.
Shermco Inc. owns 100% of Shermfam Inc., which owns 100% of the outstanding shares of Apotex Holdings. Apotex Holdings owns 100% of Apotex Pharmaceutical Holdings Inc., which owns 100% of the outstanding shares of both Apotex and Brantford.
Apotex Pharmaceutical Holdings Inc. and its affiliates have owned 75% of Brantford (then ACIC) since March 1990. The family of Luciano Calenti, ACIC's president, owned the minority interest, along with institutional investors. Apotex Pharmaceutical Holdings Inc. acquired the remaining 25% of ACIC in 1996. In 1990 ACIC was experiencing financial difficulties and Calenti turned to Sherman, a longtime client of ACIC. Sherman pursued the acquisition of ACIC as an opportunity to integrate a supplier with his operations and increase their capacity to develop chemicals. Plaintiffs claim that Sherman did not take an active interest in ACIC until 1996, when he bought out Calenti. Calenti "ran the company" himself until the buy out in July 1996.
Apotex Holdings also owns 100% of Shermfin, Inc., which owns 100% of both Sherman Delaware and Glastex Investments, Inc. From 1993 to 1997, Sherman Delaware and Glastex Investments owned outstanding shares of Barr. In mid-1993, they owned approximately 66%. As of December 31, 1997, Sherman Delaware and Glastex Investments owned approximately 63% of Barr. After a Barr secondary offering in March 1998, Sherman Delaware and Glastex Investments owned approximately 48.6% of Barr.
Invamed filed its complaint on February 6, 1998, alleging violations of the antitrust laws of the United States and various state law claims arising out of defendants' alleged efforts to monopolize and restrain trade in the markets for an oral anti-coagulant medication known as warfarin sodium. The complaint alleged eleven causes of action against the defendants.
On April 9, 1998, Sherman, Apotex Holdings, Apotex, and Sherman Delaware moved under Fed.R.Civ.P. 12(b)(6) to dismiss Invamed's First, Second, Third, Fourth, Eighth, and Ninth Causes of Action, claiming that there are no allegations in the complaint which would establish the basis for those claims. The Court granted this motion to dismiss with leave to replead. Invamed did not replead.
Therefore, Invamed's eleven causes of action are as follows. Count I and II allege monopolization and attempted monopolization against Barr and ACIC/Brantford in both the relevant warfarin sodium market and the market for clathrate, the bulk material used to make the drug. Counts III and IV allege conspiracy to monopolize against Barr and ACIC/Brantford. Count V alleges against all defendants that the acquisition of ACIC/Brantford by Apotex and, through Apotex, by Apotex Holdings, Sherman, Sherman Delaware, and Barr, violates Section 7 of the Clayton Act. Counts VI and VII allege breach of contract and promissory estoppel against ACIC/Brantford. Counts VIII and IX allege tortious interference with contract and with business relations against Barr. Counts X and XI allege negligence and negligent misrepresentation against ACIC/Brantford.
Apothecon filed a separate suit on May 19, 1999, and the cases were consolidated on July 29, 1999. Apothecon included the same causes of action discussed above as well as a few additional ones. Against Barr and ACIC/Brantford, it alleged violation of the Donnelly Act, New York's antitrust law (Count VI) and fraud (Count VIII). Further, it alleged breach of fiduciary obligation (Count XIV) against ACIC/Brantford and unfair competition against Barr (Count XV).
The defendants moved for summary judgment on August 6, 2001. They filed a joint motion on plaintiffs' antitrust claims, and ACIC/Brantford and Barr each submitted a separate motion addressing the state law claims against them. Oral argument was heard on February 13, 2002, and submissions were considered fully complete at that time.
The following facts are taken from the parties' Rule 56.1 statements and, as required, are construed in the light most favorable to the non-movant, as applicable.2
Warfarin sodium is an oral anti-coagulant medication that, in tablet form, is prescribed for the treatment of venous thrombosis and pulmonary embolism, or blood clots, particularly in patients over the age of 60. In its simplest terms, warfarin sodium...
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