Pharmaceutical manufacturer Cipla Medpro South Africa Limited (CMP) disclosed on Friday that it has reached a settlement with Reckitt Benckiser (SA) (Proprietary) Limited (RBSA) in relation to a R332 million claim by the former.
The case arose from a manufacturing agreement entered into in 2003 and relating to the temporary closure in 2007 of Cipla Medpro’s factory in Durban by the Medicines Control Council‚ while it was still named Enaleni Pharmaceuticals.
In terms an agreement reached through arbitration proceedings‚ Cipla Medpro will pay RBSA a full and final settlement amount of R80 million. Cipla will abandon counter claim of R280 million while RBSA will likewise abandon the remainder of its claims.
The amount to be paid represents compensation by the Cipla Medpro to RBSA for the higher cost to RBSA of procuring alternative supplies of the products the company would otherwise have supplied to it‚ had its manufacturing facility not temporarily closed and while it underwent a necessary upgrade to international manufacturing requirements and standards.
Cipla Medpro advised shareholders at the same time that it expects earnings per share (EPS) and headline earnings per share (HEPS) for the year ended 31 December 2011 to be between 20% and 25% lower than the EPS of 80.8 cents and HEPS of 80.8 cents as disclosed in the Provisional Financial Statements.
The company’s share price ended two cents or 0.27% lower at R7.33 per share on the JSE on Friday‚ but it traded as low as R7.13 during the session. - I-Net Bridge