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Brewer, Attorneys & Counselors successfully represented 3M in trial proceedings relating to the $854 million sale of its European pharmaceutical business to Meda AB (“Meda”), a Sweden-based global pharmaceutical company.
The case was resolved in 3M’s favor on every count, as the court found that the company honored its contractual obligations in connection with the sale of the business. In so doing, the court denied an estimated $200 million in damages being sought by Meda.
Meda alleged that 3M’s failure to disclose a non-public provision of a document produced by France’s drug-pricing authority caused Meda to overpay for the business by more than $200 million. Plaintiff further alleged that 3M failed to make certain disclosures regarding the potential re-pricing of a cardiac drug known as Tambocor in most of the world and Flecaine in France. The drug was included in the portfolio of assets acquired by Meda in the transaction, dated November 8, 2006.
Following a nine-day bench trial, the court’s decision confirmed that 3M acted appropriately in connection with the sale of the business. The opinion validated that 3M provided Meda with access to all the critical information it required to assess the viability of this business.
As the opinion noted, such pricing adjustments are important because in France “the government provides reimbursement for the price of over 90% of drugs on the market…one of the most important objectives of pharmaceutical companies introducing a drug to market is to convince the French government to agree to a high reimbursement price.”
3M successfully proved that Meda should have known about any pricing adjustments due to the availability of public information, that the company appropriately prepared offering materials, and that Meda failed to exercise due diligence in connection with its pursuit of the business.
The court wrote, “…Meda’s diligence related to drug pricing was not thorough or meticulous.” Significantly, Meda never took full advantage of an electronic “data room” established by 3M that included approximately 8,800 documents for the benefit of potential purchasers of the business.
“In short, although Meda was provided with a significant resource to conduct due diligence, the Court finds that it did not take full advantage of that resource, nor did it engage in diligence regarding drug pricing in a careful or thorough manner,” wrote Judge Nathan.
Partner William Brewer said that the case outcome was “an important validation of 3M’s business procedures and confirms that the company acted in full compliance with the legal and regulatory requirements in connection with this transaction.”
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