Process Management

News 493 views last update:6 Aug 2012

Rongyao accuses Pfizer of contract breaching

Chinese manufacturer Zhejiang Rongyao Chemical has filed a lawsuit against Pfizer in the US, claiming that Pfizer has breached its contract with Rongyao to purchase Roxarsone, the active ingredient in 3-Nitro, a veterinary product used for treating coccidiosis in poultry.

Alpharma of Bridgewater, NJ, now a part of Pfizer Animal Health, had an exclusive multi-year agreement to purchase Roxarsone/3-Nitro from Rongyao, but voluntarily suspended sales of the product after a meeting with the US Food and Drug Administration (FDA).
 
Alpharma had been a distributor of 3-Nitro for many years. In June 2011, sales abruptly stopped when Pfizer voluntarily halted distribution without any advance notification to or consultation with Rongyao, following a report by the FDA that allegedly found high levels of inorganic arsenic in the livers of treated chickens.
 
At the time of the decision to halt the distribution, both Pfizer and the FDA had stressed that 3-Nitro did not pose an imminent public health risk and that there was no need for people to alter their chicken consumption.
 
Report flawed
According to Dr. Rener Chen, Rongyao's General Manager, "The FDA's study was incomplete, non-peer reviewed and the results, therefore, are flawed. Further expert scientific review has found it inconclusive due to various inconsistencies."
 
As a result of Pfizer's actions, effectively cancelling a multi-year deal struck in January 2011, Rongyao can no longer sell Roxarsone/3-Nitro in the US, Canada and a number of other markets, resulting in more than twenty million dollars in losses for Rongyao.
 
Health division sell off
Dr. Chen further stated that, "The timing of Pfizer's decision to voluntarily suspend its sales of 3-Nitro, under the veil of the FDA study and the associated FDA pressure, is suspect as it comes at the same time as reports in the industry that Pfizer is looking to completely sell off all of its Animal Health division and remove itself from this market altogether."
 
Rongyao has requested judgment in its favour for all compensatory damages, including but not limited to lost profits, plus interest, attorneys' fees, and further relief that the Court deems just and proper.

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