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Mitsubishi Tanabe lands '$940m' revenue boost after Novartis win

Credit: Taljat / Adobe Stock

Paul Hastings led Mitsubishi Tanabe to victory over Novartis at the International Chamber of Commerce

Japanese pharma company Mitsubishi Tanabe has secured an arbitration victory against Novartis at the International Chamber of Commerce, a case related to blockbuster multiple sclerosis drug Gilenya (fingolimod).

According to Mitsubishi Tanabe, a subsidiary of Mitsubishi Chemical Group, the award will see its revenue increase by around $940 million.

The tribunal, which issued the decision on Monday, February 13, denied Novartis’s claims that provisions of a licence controlling royalties that it had to pay to Mitsubishi Tanabe in the US, EU and other jurisdictions were invalid.

Although Mitsubishi had received royalties from Novartis’s Gilenya, which used the Japanese company's patent rights and know-how, it hadn’t recognised those royalties as revenue. This was due to International Financial Reporting Standards 15, which sets out how to report information about revenue and cash flows from contracts with customers.

However, as a result of the ICC's decision, Mitsubishi can now recognise these royalties as revenue.

In a filing with Japan’s Financial Accounting Standards Foundation on Thursday, February 16, Mitsubishi said it was revising its revenue forecast for this quarter by ¥126 billion ($938.4 million) in light of the arbitration win.

The filing said: “The royalties which have not been recognised as revenue … during the arbitration proceedings will all be recognised as revenue in the fourth quarter of the fiscal year ending March 31 2023.”

Mitsubishi also received ¥3 billion in arbitration-related costs from Novartis.

The Swiss pharma company had filed an application for an arbitration against Mitsubishi Tanabe in 2019.

Paul Hastings advised Mitsubishi Tanabe.

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