LiLLY Warns China's Failure To Protect Prozac Could Hurt Trade
May 15, 1998 9:41 AM
By Ian Johnson, Staff Reporter
BEIJING -(Dow Jones)- Speaking for the first time
since filing a lawsuit in Chinese court to enforce patent
protection of its Prozac antidepressant drug,
pharmaceutical giant Eli Lilly & Co. told Dow Jones
Friday that failure to protect Prozac could hurt foreign
investment in China.
Lilly's (LLY) decision to go public with its dispute also
comes just weeks before President Clinton is due to
arrive in China to discuss, among other issues, growing
trade problems between China and the U.S. Lilly China
operations head Richard Smith said China isn't living up
to treaty obligations it signed with the U.S. and the
European Union, and unless it changes its way, foreign
investors "will be very hesitant to invest" there.
Smith said the company's high-profile legal challenge
came after U.S. government lobbying efforts had failed
to convince the State Pharmaceutical Administration of
China to protect Prozac's patent and close down
Chinese generic manufacturers of the popular drug. The
U.S. Trade Representative and President Clinton have
brought up the matter repeatedly with Chinese officials.
"The SPAC was not going to change its mind, so we
decided to pursue legal action," he said.
Other companies have been wary of antagonizing
Chinese authorities by filing lawsuits against unfavorable
rulings, but Smith said that since the first lawsuit - which
Lilly lost - was filed two years ago, the authority has
since protected other of the drug maker's products.
The sticking point with Prozac is differing interpretations
of regulations governing Chinese intellectual-property
rights, which are based on a memorandum of
understanding between China and the U.S. and EU. The
memorandum, and the subsequent regulations, require a
drug to enjoy "exclusivity" in its home country, which
means some sort of patent or protection, for it to be
protected by Chinese law. The Chinese pharmaceutical
authority has argued that Prozac doesn't meet the
requirements to be protected by the regulations.
After the Chinese lower court ruled last year in favor of
the government, Lilly filed its current suit in intermediate
court. The court held its hearing Thursday and will rule in
six weeks.
If Lilly loses the case it will probably appeal to the
Chinese supreme court, Smith said.
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