Lannett Company, Inc.
) recently extended its contract with Jerome Stevens
Pharmaceuticals, Inc. for the exclusive distribution of Jerome
Stevens' Butalbital, Aspirin, Caffeine with Codeine Phosphate
capsules USP, Digoxin tablets USP and Levothyroxine Sodium
tablets USP in the U.S.
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The agreement, which was due to expire in Mar 2014, is now
extended for another five years. Moreover, Lannett and Jerome
Stevens have agreed to mutually discuss the extension of the
agreement for five more years up to Mar 2024.
We note that in Mar 2004, Lannett inked a 10-year deal with
Jerome Stevens for the exclusive distribution rights in the U.S.
to products in the latter's portfolio, in lieu of 4,000 shares of
Lannett's common stock. The minimum purchase quantity as per the
deal for the first year was $15,000, which increased by $1,000
every year after that.
For the tenth year of the agreement, the minimum quantity is
expected to be $24,000. So far, Lannett has successfully met the
minimum purchase requirement of the contract. On the other hand,
Jerome Stevens has the option to terminate the agreement if
Lannett fails to meet the minimum purchase requirement of the
Lannett stated in its press release that the products under the
contract contributed around $250 million to the company's gross
profit in 10 years. Moreover, the purchase of the products
exceeded the initial targets.
Lannett currently carries a Zacks Rank #3 (Hold). Other players
Biogen Idec Inc.
Gilead Sciences, Inc.
) currently look more attractive in the pharma space with a Zacks
Rank #1 (Strong Buy).