Daewoong Pharmaceutical announced on the 2nd that it has terminated its approximately 69.2 billion won supply contract for pharmaceuticals in Southeast Asia with Swiss company ABBOTT PRODUCTS OPERATIONS AG (Abbott).

According to the regulatory filing, the terminated contract covers the export and supply of 'Daewoong Pitavastatin Calcium Tablets' to Southeast Asia. The termination amount is 69,227,120,771 won, equivalent to 8.24% of the company's revenue (839,686,478,174 won) in fiscal year 2015, the most recent business year at the time the contract was originally signed.

[Contract Originally Running to November 2026 Terminated Early by Mutual Agreement]

The contract was signed on November 2, 2016, with an original term running until November 2, 2026. The contract counterparty, ABBOTT PRODUCTS OPERATIONS AG, held exclusive sales rights for the pitavastatin calcium tablets in four Southeast Asian countries — Thailand, Vietnam, the Philippines, and Myanmar — and was responsible for obtaining local product approvals and importing and selling the product.

Daewoong Pharmaceutical cited changes in the business environment as reasons for the termination, including sluggish local sales and business performance, and the inability to maintain domestic product approval due to non-production and non-sale in Korea. Accordingly, the two parties signed a mutual termination agreement and ended the contract.

[Original Contract Value 72.8 Billion Won… Fulfillment Rate of 4.91%]

The original contract value was 72,816,220,740 won. The termination amount was calculated by deducting the combined 3,573,041,303 won in sales generated and contract payments and milestones received through the termination date. The fulfillment rate against the original contract value is 4.91%.

The original contract value totaled 63,759,119 US dollars, consisting of contract payments and regulatory milestones of 1,525,000 dollars, sales milestones of 3,000,000 dollars, and expected export payments of 59,234,119 dollars calculated by applying a transfer pricing rate to the counterparty's 10-year local sales forecast. The won conversion used the Seoul Money Brokerage exchange rate (1,141.80 won per dollar) on November 2, 2016, the date the contract was originally signed.

According to the filing, the termination date is February 28, 2024. Daewoong Pharmaceutical explained that this date is when the counterparty sent the contract termination agreement and when the termination took effect.