Novartis Fails to Purchase Vaccine KoVax Seeks $4 Million

/ By Itzhak Dannon /

Novartis Animal Health (U.S.), an American corporation that manufactures and distributes medication and treatments for animals is sued for NIS14.5 million (just short of $4 million at current rates) by the Israeli bio-tech company KoVax Ltd., which specializes in the development and manufacturing of vaccines for aquatic creatures.

פטיש LAWThe lawsuit, filed utilizing a speedy adjudication procedure, states that in February 2010, after negotiations between the parties that were conducted in Israel (which gives a local court jurisdiction over the suit), the parties entered into a five years distribution agreement, granting Novartis exclusive distribution rights in the U.S. and Canada of a vaccine plaintiff developed, the KV3 vaccine, designed to prevent the disease CyHV3 (more commonly known as KHV) from afflicting two types of fish, the common carp and the koi. The disease destroys about 95% of any fishstock that contracts it. The vaccination is an innovative development patented as a unique product in the world. It has been successfully marketed in Israel since 2004.

According to plaintiff, it discovered during the first few months of distribution of the product by Novartis that the marketing of the product was conducted in a negligent manner. Accordingly, plaintiff sent, at its own expense, aquatic biology experts to the U.S., to train Novartis’ sales personnel; also, its marketing representatives were brought, at plaintiff’s expense, to Israel to undergo training.

The lawsuit claims that Norbtis breached the distribution agreement by failing to comply with its contractual obligation to purchase a minimum quantity of vaccines sufficient to inoculate one million kg (2.2 million lbs.) of fish, a purchase valued by plaintiff at $3.33 million during each year of the life of the agreement. Nor did Novaris – according to the suit — make the full payment, as agreed, to plaintiff for the entire balance for the minimum amounts it was required but failed to purchase in any given year for the duration of the agreement, so far.

Plaintiff asks the Court to compel the payment Novartis is required to make according to the terms of the agreement until the termination date of the distribution agreement, following its rescission by defendant effective as of mid-August of this year. The pleadings aver that in 2013 Novartis did not order from plaintiff any amount of the products it had agreed to purchase, and even stopped marketing and distributing the product since the beginning of the year.

According to the terms of the agreement between the parties, plaintiff is barred from distributing the products either by itself or through third-party in the U.S. or Canada.

Plaintiff asserts that it reserves the right to amend the complaint once the contractual relationship between the parties reaches its terminal point at which time it will be able to assess all damages resulting from defendant’s breach.

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