Du Pont and Syncor cross swords over Mexican distribution of Cardiolite

Du Pont claims Syncor sold Cardiolite knockoff

Du Pont Pharmaceuticals gave its key U.S. Cardiolite distribution partner, Syncor International, an unpleasant surprise in June when it filed a patent infringement lawsuit against the Woodland Hills, CA, firm’s Mexican subsidiary, Syncor de Mexico.

DuPont’s June 17 filing with the Mexican Institute of Industrial Property alleges that Syncor illegally bought and sold Cardiolite kits in Mexico, including counterfeit Cardiolite not made by DuPont. Du Pont says its claim is based on evidence collected over several months of investigation and product testing, according to the North Billerica, MA-based firm, and the Mexican government has begun an investigation into the dispute.

News of the filing caused industry observers to question whether the two firms’ U.S. partnership will be jeopardized. Syncor’s alleged actions have cast doubt on the relationship between the two firms, said Du Pont’s public affairs representative, Lili Gordon.

“We’re astonished that Syncor betrayed our trust by trading in counterfeit Cardiolite. Syncor’s conduct causes concern for us about our ongoing relationship,” Gordon said. “Our goal is to protect patients in Mexico, to ensure that they’re receiving the high quality Cardiolite their doctor ordered. We’re also concerned about protecting our intellectual property rights in this area.”

The two companies rely heavily on their U.S. partnership, which has been mutually beneficial since Du Pont chose Syncor as its preferred U.S. distributor for Cardiolite in 1994. Cardiolite sales have boosted Syncor’s financial results since the company began selling the product, and Du Pont has benefited from Syncor’s distribution networks. Syncor has 120 radiopharmacies in the U.S. and 16 worldwide. It buys more than $200 million worth of Cardiolite each year, and distributes more than 80% of the unit doses of the agent sold in the U.S. The two companies’ distribution agreement will not expire until 2004, and is subject to automatic five-year renewal terms, Syncor said.

Du Pont and Syncor have no formal agreements for distribution of Cardiolite outside the U.S., where Cardiolite is sold through country-by-country agreements. Du Pont holds two Mexican patents for Cardiolite, which give it exclusive rights in Mexico to manufacture, sell, and distribute the agent. The company has authorized only one firm, Accesorios Para Laboratorios, to sell and distribute Cardiolite in Mexico. Cardiolite that Syncor might distribute in Mexico would be purchased from Accesorios, according to Syncor.

“Any Cardiolite that we would get (in Mexico) would be from their distributor Accessorios Para Laboratorios,” said Ed Burgos, senior corporate counsel at Syncor. “Or we would order it from Du Pont, which would ship it to Accessorios to distribute to us. So (the allegations) make us scratch our heads, since all of our Cardiolite is coming either directly or indirectly from their distributor.”

In a written response to Du Pont’s claims, Syncor stated that it has filed a defense and categorically denied the charges. The company has included in its defense an affidavit from the hospital from which Du Pont claims to have obtained a sample of the counterfeit Cardiolite, according to Burgos.

“According to the affidavit, the hospital never gave Du Pont a sample,” Burgos said. “So we don’t know where they got their sample, and it’s hard to say on what they’re basing their claims.”

Du Pont’s allegations come as Syncor de Mexico is expanding its market. This spring, Syncor de Mexico acquired exclusive distribution rights in Mexico to Nycomed Amersham’s Myoview and signed two contracts with Mexican government hospitals in Mexico City to provide unit doses of cardiac imaging agents, either Cardiolite or Myoview.

Syncor does not believe that Du Pont’s allegations will affect its operating results, which have increased by 54% in the first six months of 1999 compared to the same period the previous year, according to senior vice president and CFO Michael Mikity.