Sun | Oct 22, 2017

Lasco about a year away Pfizer payday

Published:Sunday | June 14, 2015 | 12:00 AM

Lasco Distributors might now be just a year away from a more than $400 million payday from its legal battle with international drug company, Pfizer.

Following last July's Privy Council ruling in favour of the local pharmaceutical distributor, Lasco's lawyers are gearing up to be heard on January 18, 2016 for assessments of damages payable to the company under the undertaking Pfizer gave to the court.

The bill for damages has been climbing as it has been over a decade since the local distributor was barred from selling its blood-pressure medication due to an injunction filed against it on a claim that it used patent-protected drugs owned by Pfizer.

The last estimate provided by Lasco's attorneys put damages at $400 million as at March 2012.

It's hard to say how much more will be tacked on in the final assessment next year. But adding four more years of lost sales might give Lasco a windfall that matches the profit earned by the pharmaceutical division over the last decade. The segment earned approximately $560 million over the 10 years to March 2015.

On the other hand, it might be difficult to prove that such a substantial amount of revenue would have been foregone, given that the local distributor has been struggling with increasing competition from generic drug suppliers - at least since it listed in 2010.

Lasco's pharmaceutical division's revenue grew by seven per cent on average over the last five years, and it totalled $2 billion in the year to March 31, 2015, reflecting sales of some 18 brands, including Bayer, Novartis, Roche and its own brand, LASMED.

"Given the increase in the number of generic competitors, changes in the business structure and increased competitive activity, it is clear there is a paradigm shift in the pharmaceutical industry," said the company in its 2014 annual report.

The distributor's consumer division has fared better. Revenue doubled over the past five years, and totalled $9.1 billion in the year to March 31. Profit also grew from $50 million in the 2010 financial year to $500 million in the last financial year, or, put another way, profit averaged $437 million a year over the last five years, compared with an average of $57 million over the previous five-year period.

Most recently, Lasco set about undertaking further expansion of its warehouse space by 100,000 square feet at a cost of $1.2 billion to accommodate a wider range of powdered products made by its affiliated manufacturing company which operates under the same brand.

It plans to partly finance the warehouse expansion with $700 million in debt financing it secured in the form of promissory notes with financial institutions, according to its latest financial statements.

camilo.thame@glenaerjm.com