Novartis has made more than $30 billion from sales of its multiple sclerosis therapy Gilenya. But lately the drug’s decline has brought headaches for the Swiss pharma giant.
A series of patent defeats has led Novartis to a last ditch appeal with the U.S. Supreme Court. Now, the company has been told to fork over $940 million in royalties to Mitsubishi Chemical Group.
In a filing (PDF) this week, Mitsubishi revised its forecast for revenue in this quarter based on the windfall of 126 billion yen (around $940 million).
Novartis also will have to pony up a portion of the expenses Mitsubishi incurred in the arbitration, the Japanese company said. Novartis requested the arbitration four years ago, according (PDF) to another Mitsubishi filing.
Novartis had alleged that “certain parts of provisions in the license agreement providing Novartis’s royalty payment obligations were invalid,” Mitsubishi said in its filing.
The arbitration tribunal denied Novartis’s claims and “determined that all disputed provisions ... in the license agreement are valid,” Mitsubishi wrote.
Although the royalties were paid by Novartis, a Novartis spokesman said, Mitsubishi said in its filing that the royalties "will be recognized collectively as revenue" in the current quarter.
The dispute dates to a licensing agreement signed (PDF) by Novartis and Mitsubishi Tanabe Pharma forerunner Yoshitomi back in 1997. Novartis received worldwide development and Japanese co-development rights, along with marketing rights to Gilenya (fingolimod), which was approved by the FDA in 2010.
Mitsubishi Tanabe Pharma is a subsidiary of Mitsubishi Chemical Group.
In its second full year on the market, Gilenya was a blockbuster. Sales topped (PDF) out in 2018 at $3.3 billion. Since then, generic competition has eroded sales, though the immuno-suppressant remains formidable, generating $2 billion last year.
Five months ago, Novartis said it planned to petition the U.S. Supreme Court to take up its appeal of a patent case against Chinese generics maker HEC Pharma, after the U.S. Court of Appeals for the Federal Circuit rejected its bid to rehear the case.