Astrazeneca AB & Anor v KRKA, DD Novo Mesto & Anor

Compensation under a cross-undertaking in damages is assessed on a compensatory basis. Where an injunction prevents entry into a market, the court may value the lost commercial opportunity even though the outcome involves contingencies and cannot be calculated with precision.

The claimant must establish that the chance of profit was real rather than fanciful. The court must then evaluate that chance, including the hypothetical conduct of third parties and the claimant, and apply appropriate discounts. A party withholding relevant evidence within its control may face adverse factual inferences.

The defendants sought compensation under a cross-undertaking given by the claimants when an interim injunction restrained the launch of the defendants’ branded generic pharmaceutical product, Emozul. The injunction remained in force from October 2010 until July 2011. Emozul was then launched into a market transformed by the entry of other generic products.

The central issue was the loss caused by the defendants’ inability to launch in October 2010. The court had to assess the counterfactual market penetration, the likely response of the claimants and other market participants, and the appropriate valuation of the lost opportunity.

1. The defendants established in principle an entitlement to compensation under the cross-undertaking. The inquiry was compensatory and concerned the loss caused by the injunction, assessed on the counterfactual assumption that Emozul would have been launched forcefully in about October 2010.

2. The court followed the principles identified in Les Laboratoires Servier v Apotex Inc. [2008] EWHC 2347; [2009] FSR 3. Damages for a lost commercial opportunity could be assessed despite uncertainty. The defendants had to show that the chance of profit was real rather than fanciful, after which the court had to evaluate the substantial chance and reflect the relevant contingencies in the award.

3. The assessment required consideration of hypothetical conduct by Medicine Managers, prescribers, patients, other generic suppliers and AZ. The court preferred the direct evidence of representative Medicine Managers to academic material concerning hypothetical or survey bias and to the proposed comparator markets.

4. AZ had not produced evidence concerning the internal cost-benefit analysis that would have governed any reduction in Nexium’s price, despite that evidence being within its control and relevant to an issue AZ itself had raised. Applying the approach in Wisniewski v Central Manchester Health Authority [1998] Lloyds Rep Med 223, Herrington v British Railways Board [1972] AC 877 and The Law Debenture Trust Co. Plc v Elektrim [2009] EWHC 1801 (Ch), the court inferred that AZ would not have reduced Nexium’s price in the counterfactual scenario.

5. The court found that the October 2010 launch would probably have secured substantial switching from Nexium to Emozul or generic esomeprazole capsules. Appropriate reductions were made for uncertainty, variation between markets and other vicissitudes. The parties were directed to agree the final figures and order, with liberty to make further representations if required.