SciPharm Sarl v Moorfields Eye Hospital NHS Foundation Trust

Damages for breach of a pharmaceutical development agreement are recoverable to the extent that they represent loss directly attributable to the defendant’s failure to perform its contractual obligations. This may include reasonable costs incurred in having a third party complete or repeat the required work.

The claimant is not required to adopt a materially restricted replacement process merely to reduce damages where that restriction would prevent validation of other commercially relevant volumes. Recovery remains subject to proof that the claimed expenditure was incurred, and appropriate credits must be allowed for costs saved or benefits received.

The claimant succeeded on liability in an earlier judgment, in which the defendant was found to have breached a pharmaceutical drug development agreement by failing to complete development, stability testing, validation work and related regulatory work after losing its GMP licence.

This judgment concerned quantum. The claimant claimed €1,794,932 under heads including replacement production and validation, stability studies, preparation of regulatory material and an emergency drug batch. The court considered the defendant’s challenges to individual items, including proof of payment, duplication, additional batches, batch volumes and credits for costs which the defendant would otherwise have incurred.

1. Recoverable loss. The claimant was entitled to compensation for loss directly attributed to the defendant’s failure or inability to complete its obligations under the development agreement. Reasonable expenditure incurred to ensure performance by a third party could be recovered where it gave the claimant the benefit of the contractual bargain.
2. Replacement validation. The claimant was not obliged to limit the replacement process to two-litre batch sizes. Such a restriction would prevent manufacture of other volumes because the relevant processes, including stability, would not have been validated. The court therefore rejected the proposed 37.5 per cent reduction, but allowed a deduction of €4,716.60 to reflect the appropriate saving on comparable replacement volumes.
3. Proof of loss. Claimed sums were disallowed where the claimant produced neither an invoice nor proof that it had paid the relevant amount. Conversely, contemporaneous invoices and supporting contractual or validation documents could establish the loss on the balance of probabilities.
4. Individual claims. The court allowed or disallowed items according to whether they were within the defendant’s contractual obligations, sufficiently evidenced, and causally connected with the breach. It rejected speculative calculations of a manufacturing-cost credit but accepted that an appropriate credit was required where the defendant would otherwise have incurred manufacturing costs.
5. Disposition. Damages were awarded under the permitted heads, subject to clarification of the treatment of certain samples and the proposed credit based on quotation P1105. Interest, costs and any application for permission to appeal were reserved for consequential determination.

• High Court, Circuit Commercial Court: An earlier judgment dated 16 March 2023 determined liability in the claimant’s favour. Permission to appeal the liability findings was granted and that appeal was pending. Permission to appeal the finding that certain expenses paid by CompLex were irrecoverable had been refused. The present judgment determined quantum and awarded damages subject to limited clarification.