Mitsubishi Tanabe Pharma Corporation (International Arbitration)

The Situation

In January 2009, Mitsubishi Tanabe Pharma Corporation (MTPC) filed a request for arbitration with the International Chamber of Commerce to resolve a dispute with another major pharmaceutical manufacturer over the terms of their agreement involving a popular blockbuster drug. MTPC buys the drug from the manufacturer and then sells it in the Japanese market. The dispute involved MTPC’s request, pursuant to a clause in the agreement between the parties, for a reduction of the price at which MTPC buys the drug (the “supply price”).

NERA's Role

A NERA team led by Dr. Sumanth Addanki was retained by counsel for MTPC to estimate the appropriate supply price. Relying on testimony by a technology licensing expert retained by Simpson Thacher who testified about the appropriate division of profits from Japanese sales of the drug between MTPC and the manufacturer, Dr. Addanki filed multiple reports revolving around estimation of the supply price that would effect that division of profits. In his analysis, Dr. Addanki considered the effects of alternative supply prices on forecasts of the parties’ revenues and costs, using those forecasts to estimate discounted values of profits that would accrue to the parties. After filing his reports—including joint reports with the manufacturer’s expert that were requested by the arbitration tribunal—Dr. Addanki testified in a weeklong hearing in November 2011 at the International Court of Arbitration in Paris. Dr. Addanki also submitted various post-hearing filings with further calculations requested by the arbitration tribunal.

The Result

In February 2013, the three-member tribunal issued a ruling in favor of MTPC, mandating a substantial reduction in the supply price paid by MTPC.