Continued Non-Compliance with COVID-19 Test Kit Delivery Deadlines
Lawsuit Filed for Damages and Advance Payment Refund
[Asia Economy Reporter Myunghwan Lee] Celltrion announced on the 1st that it filed a lawsuit against Humasis, its COVID-19 diagnostic kit business partner, on the 31st of last month, claiming damages and the return of advance payments.
Celltrion explained that this lawsuit was filed to secure legal rights due to Humasis's continued failure to meet COVID-19 diagnostic kit delivery deadlines and the breakdown of negotiations.
According to Celltrion, the two companies signed a joint research and product supply agreement on June 8, 2020, for the development, commercialization, and supply of COVID-19 antigen rapid diagnostic kits. Subsequently, both parties completed the development and commercialization of professional antigen rapid diagnostic kits (POC) and personal antigen rapid diagnostic kits (OTC), and began full-scale supply to the U.S. market through Celltrion's U.S. subsidiary.
Celltrion placed multiple orders with Humasis from the second half of 2021 to early 2022 to supply the U.S. market, a period when demand for diagnostic kits surged due to a sharp increase in COVID-19 cases in the U.S. However, Celltrion claims that Humasis repeatedly failed to meet the scheduled delivery deadlines. As a result, Celltrion was unable to supply diagnostic kits to the U.S. market in a timely manner, which also dealt a significant blow to securing competitiveness in the local market.
Since April 2022, Celltrion has been in continuous discussions with Humasis to resolve the issue, but at the stage when a concrete agreement was about to be reached, Humasis refused to negotiate. Consequently, on December 26 of last year, Celltrion notified Humasis through proper procedures of the 'termination of the contract and the invalidation of individual contracts that had not yet been fulfilled.' Afterwards, Humasis expressed a desire for further negotiations, and Celltrion requested that a proposal be submitted by the 27th of last month, but no proposal was ultimately received, Celltrion added.
Celltrion stated that it filed the lawsuit demanding that Humasis compensate not only for the delay penalties incurred due to the delayed supply of diagnostic kits under the contract but also for damages exceeding the amount of the delay penalties, and return the remaining balance of advance payments for the canceled individual contracts.
A Celltrion official said, "Although serious damages occurred due to Humasis's breach of the supply contract, we have made long-term efforts for an amicable resolution. However, recently, Humasis's management showed no intention to resolve the issue, including transferring company management rights to a third party through the sale of the largest shareholder's stake, so we had no choice but to secure our legal rights through litigation."
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