Daewoong Pharmaceutical ended a supply contract for pharmaceuticals in Southeast Asia worth approximately 72.8 billion won, signed with global pharmaceutical company Abbott, with a fulfillment rate of just 4.91%. The company disclosed the relevant facts only about two years and eight months after the contract termination, prompting Korea Exchange to announce its intention to designate Daewoong Pharmaceutical as a non-compliant disclosure company.
Daewoong Pharmaceutical announced on the 2nd that it had terminated an export supply contract for pitavastatin calcium tablets in the Southeast Asian region with Abbott in Switzerland.
The contract was signed in November 2016, and the original term was 10 years, until November 2026. Abbott was to serve as the exclusive seller of the product in four Southeast Asian countries—Thailand, Vietnam, the Philippines, and Myanmar—responsible for obtaining local marketing authorizations and commercialization activities such as importation and sales.
The initial contract amount was approximately 72.8 billion won, representing about 8.7% of Daewoong Pharmaceutical's consolidated revenue in 2015 at the time of signing. However, total revenue generated and advance payments and milestone fees received up to the termination date amounted to only 3.57304 billion won. The fulfillment rate was 4.91% of the initial contract amount, with the remaining approximately 69.22712 billion won disclosed as the termination amount.
Daewoong Pharmaceutical cited poor local sales and business performance, as well as the inability to maintain domestic marketing authorization, as reasons for terminating the contract. The company explained that the business environment had changed, including the fact that it did not manufacture or sell the product domestically, making it impossible to maintain the marketing authorization, leading both parties to agree to end the contract.
The issue lies in the timing of the disclosure. The actual contract termination date stated by Daewoong Pharmaceutical was February 28, 2024, when the agreement on contract termination was sent, taking effect. However, Daewoong Pharmaceutical only disclosed the fact of the contract termination on this day, about two years and eight months later.
Accordingly, Korea Exchange announced its intention to designate Daewoong Pharmaceutical as a non-compliant disclosure company due to breach of disclosure obligations. The violation specified by the exchange was the delayed disclosure regarding the termination of a single sales/supply contract that occurred on February 28, 2024. Daewoong Pharmaceutical can file an objection to the designation announcement until the 11th. The exchange is expected to subsequently determine specific outcomes, including whether to designate it as a non-compliant disclosure company and penalty points.
Daewoong Pharmaceutical is investigating the reasons for the delay in disclosing the contract termination. It plans to release a related statement later.
in THEBIO
