On the evening of the 2nd, Lummy Pharmaceutical announced the second-instance judgment result of the purchase and sales contract lawsuit between its subsidiary and Haiyue Pharmaceutical, and the final judgment reduced the sales payment amount that Lummy Pharmaceuticals needed to pay to Haiyue Pharmaceutical. Lummy Pharmaceuticals said that it is uncertain whether to apply for retrial, which is expected to affect the total net income by approximately 29.69 million yuan. In 2023, the net income of Lummy Pharmaceuticals was -55.5989 million yuan, mainly due to lawsuits.
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On August 2nd, Cailian Press (Reporter Lu Afeng) ‘Viagra concept stock’ Chongqing Lummy Pharmaceutical Co., Ltd. (300006.SZ) seems to want to fight to the end. Tonight, Lummy Pharmaceutical announced that its wholly-owned subsidiary, Chongqing Laimai Pharmaceutical Co., Ltd. (hereinafter referred to as ‘Laimai Medical’), and Changchun Haiyue Pharmaceutical Co., Ltd. (hereinafter referred to as ‘Haiyue Pharmaceutical’) The second-instance (final-instance) judgment result of the lawsuit over the purchase and sales contract, reducing the sales payment amount that Laimai Medical needs to pay to Haiyue Pharmaceutical.
So far, the nearly five-year dispute over the exclusive agency right of Tadalafil seems to have come to a phased result, but Lummy Pharmaceutical clearly does not accept it and said it will decide whether to file for retrial with the Jilin Provincial Higher People’s Court in the near future. In addition, the judgment is expected to affect Lummy Pharmaceuticals' total net income by approximately 29.69 million yuan this year.
According to Cailian Press reporters, the relevant litigation case between Lummy Pharmaceutical and Haiyue Pharmaceutical originated from the《Tadalafil Film Chinese Authorization Agreement》signed by Laimai Medical and Haiyue Pharmaceutical in February 2019. Haiyue Pharmaceutical granted Laimai Medical the exclusive sales agency rights of all Tadalafil film products in the Chinese region and Laimai Medical was able to organize, develop and promote authorization products in the Chinese region.
However, good times did not last long. In April 2020, Haiyue Pharmaceutical proposed to cancel the exclusive sales rights of Laimai Medical in the Chinese region on the grounds that Laimai Medical had not reached the contractually agreed task goals. This opened the litigation and counter-litigation between Haiyue Pharmaceutical and Laimai Medical over “agency rights” and “purchase and sales contracts” for many years. Laimai Medical has issued nearly ten litigation announcements in recent years.
According to the announcement issued by Lummy Pharmaceutical, regarding the litigation dispute with Haiyue Pharmaceutical over the agency rights, the Changchun Intermediate People's Court ruled that the appellant Laimai Medical compensates the respondent Haiyue Pharmaceutical for a sum of 16.5 million yuan for the loss. In March 2023, Haiyue Pharmaceutical applied for retrial to the Jilin Provincial Higher People’s Court due to dissatisfaction with the (2021) Ji Min Final No. 879 Civil Judgment.
However, on July 16th of this year, Laimai Medical announced that the Jilin Higher People's Court believed that Haiyue Pharmaceutical's retrial request was not established, maintained Jilin Higher People's Court (2021) the final civil judgment of Civil Judgment No. 879. This judgment is the final judgment.
Regarding the litigation dispute with Haiyue Pharmaceutical over the purchase and sales contract, according to Lummy Pharmaceutical’s announcement on August 2nd, the Second Instance Judgment (Ji 01 Min Final No. 8443) was recently issued by the Changchun Intermediate Court: First, it upheld Changchun Xin District People's Court's judgment, which means that Lummy Pharmaceuticals shall be jointly and severally liable for the sales payment that Laimai Medical should pay to Haiyue Pharmaceutical; second, it changed the sales payment amount that Laimai Medical should pay to Haiyue Pharmaceutical based on the first instance judgment, reducing it from 51.46 million yuan to approximately 21.65 million yuan.
Lummy Medical stated that this litigation judgment is a final judgment. It is uncertain whether the company and its subsidiary Laimai Medical or Haiyue Pharmaceutical will apply for retrial, and the company cannot determine the final impact of this litigation on its financial situation temporarily. However, based on the preliminary estimates by the company's financial department, it is expected that this litigation will affect the company's total net profit by approximately 29.69 million yuan in this period.
Public information shows that Lummy Pharmaceutical is a national high-tech pharmaceutical company that integrates scientific research, production, and sales. The company's products mainly cover the chemical pharmaceutical field of anti-infection, anti-tumor, gastrointestinal and so on. Tadalafil, also known as "second-generation Viagra," was domestically first imitated by Haiyue Pharmaceutical. After Lummy Pharmaceutical signed an exclusive agency agreement with Haiyue Pharmaceutical, the industry was bullish on its prospects, and Lummy Pharmaceutical's stock price soared in less than two months.
It is worth mentioning that in the financial report, Lummy Pharmaceutical stated that in 2023, Laimai Medical’s net income was -55.5989 million yuan, a decrease of 41.0849 million yuan compared with the previous year, mainly due to Laimai Medical confirming the operating expenses of 51.7616 million yuan based on the judgment result of the first-instance ruling on the dispute over the purchase and sales contract with Haiyue Pharmaceutical.