Roche may face $1.5bn damages in Igen dispute
By Adrian Michaels in New York - Jan 07 2002 00:00:00
Roche should know this week whether it is to be hit by damages awards of more than $1bn in a long-running dispute over technology licences.
Analysts say the Swiss healthcare group could be asked to pay almost $1.5bn in a case over actions by its diagnostics division, until now a unit that has not suffered with the rest of the embattled company. The jury's decision is expected this week.
Roche Diagnostics has for four years been contesting claims by Igen, a small US company, that it breached licensing agreements covering Igen technology. Roche has been accused of withholding royalty payments and developing rival lines in violation of agreements with Igen.
The case came to court in October and before the jury started its deliberations on Friday, Igen asked for $710m in compensatory damages and "billions" in punitive damages.
Analysts believe the jury could return as early as Monday and that the case has not gone well for Roche. They are predicting an out-of-court settlement following an unfavourable jury ruling.
"There was no real defence that could hide Roche Diagnostics' apparent egregious, brazen wholesale contract breach," said Dennis Roth, analyst at Chesapeake Securities.
Mr Roth believes that Igen will be allowed to cancel its contracts with Roche, allowing it to sell the technology to other companies. He also said that total damages could be $1.1bn-$1.4bn. "A settlement value could be worth significantly more," he added.
Roche has already lost some summary judgments in the case - items that were decided before a jury trial - but maintains that there has been no material damage. If the jury agrees, the awards would be minimal. Roche can also appeal against any ruling against it. Analysts believe that Roche could end up trying to acquire Igen.
If Igen does win it will be another embarrassment for the Swiss company after a difficult 2001. The company was fined hundreds of millions of dollars by the European Union for its role in vitamins and additives cartels.
Meanwhile its once-powerful pharmaceuticals unit has come under pressure for its weak drugs pipeline and slow growth. Franz Humer, chief executive, has started a restructuring programme involving thousands of job cuts.
Roche started the Igen trial badly. In early November, the judge was critical of a senior lawyer, now no longer working for Roche, who had violated court orders and changed documents. The lawyer, Peter Homberg, failed to appear in court to answer questions. |
