This Co-Promotion Agreement ("Agreement") is entered into as of the 21st day of June, 1999 (the "Effective Date") between ALZA Corporation ("ALZA") and Abbott Laboratories Inc. ("ABBOTT").
WHEREAS, ALZA markets Ditropan XL7, a proprietary controlled release urinary incontinence product; and
WHEREAS, ABBOTT desires to co-promote Ditropan XL7 with ALZA in the United States, in accordance with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following definitions
----------- shall be applicable:
1.1 "Contract Month" means a full calendar month (except that the
first Contract Month shall start on the day of the ABBOTT launch of the
Sales Call effort and end on the last day of such calendar month, and the
last Contract Month shall mean the calendar month in which this Agreement
1.2 "Net Sales" means gross sales of the Product (as set forth on the
invoice for such Product) in the United States for use in the United States
by ALZA and any ALZA affiliate, to unrelated third parties, in arm's length
transactions, including but not limited to, pharmaceutical wholesalers,
pharmacies, hospitals, or dispensing physicians, less any of the following
charges or expenses that are incurred in connection with gross sales of the
Product during the Term:
(i) discounts, including cash discounts, customary trade allowances
or rebates actually taken or allowed, governmental rebates,
charge-backs, and group purchasing management fees for formulary
(ii) credits or allowances given or made for rejection, recall or
return (including return reserves) of previously sold Product
actually taken or allowed;
(iii) any tax or governmental charge (including any tax such as a
value added or similar tax or government charge) to the extent
it appears on Product invoices (other than an income tax levied
on the sale, transportation or delivery of Product); and
(iv) freight, insurance and duties on shipments of Product.
The parties agree that the only discounts, allowances or rebates permitted
to be charged against "Net Sales" hereunder shall be those that are
extended by ALZA in good faith and consistent with discounts, allowances or
rebates extended by ALZA on other ALZA products in the ordinary course of
1.3 "Product" means Ditropan XL7, a proprietary controlled release
urinary incontinence product currently marketed by ALZA in the United
1.4 "Representative" means a sales employee of ALZA or ABBOTT, as the
case may be, trained to make Sales Calls to the Target Audience.
1.5 "Sales Call" means a presentation to a member of the Target
Audience by a Representative during which such Representative promotes the
Product. "Sales Call" may also refer to a presentation to a member of the
Target Audience by a sales employee of Innovex, Inc. ("Innovex") or UCB
Pharma, Inc. ("UCB") in accordance with the terms of ALZA's agreements with
Innovex and UCB, respectively, during which such sales employee promotes
1.6 "Sales Quarter" shall mean a period of three (3) consecutive
Contract Months, except that the first Sales Quarter shall mean the period
from the launch of ABBOTT Sales Calls through the end of the calendar month
and the following three (3) Contract Months.
1.7 "Target Audience" means general practitioners, urologists and
other medical personnel in a position to prescribe the Product.
1.8 "Term" means the period commencing on the Effective Date and
ending ninety (90) days following the date of launch of the ABBOTT Sales
Call effort, as the Term may be extended pursuant to Section 6 hereof.
2. Co-promotion Activities
2.1 Appointment and Acceptance. ALZA hereby appoints ABBOTT, and
-------------------------- ABBOTT hereby accepts appointment, as a co-promoter of Product in the United States in accordance with the terms and conditions of this Agreement. In the event that ALZA desires to add additional Sales Calls to its marketing effort through a co-promotion arrangement with a third party, ALZA agrees that ABBOTT shall have a right of first negotiation to perform such Sales Calls, and the parties agree to negotiate in good faith the terms for ABBOTT performing such additional Sales Calls. If the parties are unable to agree on such terms, ALZA agrees that it shall not offer more favorable terms to a third party without first re-offering the additional Sales Calls to ABBOTT on such more favorable terms.
2.2 Scope of Co-Promotion. Abbott Representatives shall perform
--------------------- Sales Calls on the Target Audience as follows:
(a) ABBOTT Representatives shall perform a minimum of fifteen
thousand (15,000) Sales Calls per Contract Month (except for the first
Contract Months in which ABBOTT Representatives shall perform an
appropriate number of Sales Calls as determined by ABBOTT). In the
event ABBOTT fails to perform such required minimum Sales Calls by a
variance of minus ten percent (10%) or less, ABBOTT shall be entitled
to make up such variance by performing all of such variance in the
subsequent Contract Month, in which case ABBOTT shall be compensated
for such variance.
(b) All Sales Calls by ABBOTT Representatives shall be performed
in the first position.
(c) ABBOTT Representatives shall deliver promotional materials
supplied by ALZA pursuant to Section 2.7 to the Target Audience.
ABBOTT shall not distribute any other Product promotional materials.
(d) ABBOTT Representatives shall perform Sales Calls in
accordance with approved labeling and all applicable laws and
regulations, including but not limited to the Food, Drug and Cosmetics
Act of 1938, as amended, and the Prescription Drug Marketing Act of
1987, as amended.
(e) ABBOTT shall launch the Sales Calls by the ABBOTT
Representatives within thirty (30) days after the Effective Date.
2.3 ALZA Sales Calls Efforts. ALZA Representatives shall continue to
perform Sales Calls substantially in accordance with (or greater than) its
current level of performance, which, when combined with the number of Sales
Calls required of Innovex, is equal to fourteen thousand (14,000) Sales
Calls per month.
2.4 Sales Calls Tracking. Each party shall keep track of the number
and position of Sales Calls by its Representatives in accordance with its
normal internal reporting procedures. From time to time upon the
reasonable request of a party, the other party shall provide a report with
respect to the number of Sales Calls performed by its Representatives
during the preceding time period. In addition, from time to time, upon
request by ABBOTT, ALZA shall provide a report with respect to the number
of Sales Calls performed by Innovex and UCB, respectively. Each party
shall have the right from time to time to accompany Representatives of the
other party on Sales Calls or otherwise audit Sales Calls for compliance
with this Agreement.
2.5 Communication. ABBOTT and ALZA shall meet at least once in each
Sales Quarter during the Term to review co-promotion effectiveness and to
formulate and implement Sales Calls strategies and other aspects of the co-
promotion. Each party will designate an individual responsible for
overseeing that party's day-to-day performance under this Agreement.
ALZA's initial designee is Mr. Jay Shepard and ABBOTT's initial designee is
Mr. Robert Altman. Either party may change its designate by written notice
to the other.
2.6 Training. ALZA will provide, at ALZA's expense (except for
ABBOTT personnel travel and lodging expense), an initial training meeting,
within fourteen (14) days after the Effective Date, with ABBOTT personnel
to prepare ABBOTT to train its
Representatives on the Product. In addition, ALZA shall provide ABBOTT with
Product training materials for all ABBOTT Representatives. All other
training expenses of ABBOTT Representatives shall be at the sole expense of
2.7 Promotional Materials; Samples. ALZA shall provide to ABBOTT,
without charge, currently available promotional materials specific to the
Product, in sufficient quantities for ABBOTT to perform its obligations
hereunder. ABBOTT shall use promotional materials for the Product supplied
by ALZA or approved in writing by ALZA and the approved Product labeling
and will not deviate from the text of such materials and/or labeling. In
addition, ALZA shall supply ABBOTT, without charge, Product samples for
distribution by the ABBOTT Representatives at a level of samples consistent
with that supplied by ALZA to its own Representatives. ABBOTT shall cause
its Representatives to comply with all federal, state and local laws, rules
and regulations concerning the handling, distribution and tracking of
samples, and ABBOTT shall maintain all required records to enable ALZA to
account for and track such samples.
2.8 Product Complaints. ABBOTT shall give ALZA notice of any
complaint or correspondence concerning the Product, including, but not
limited to, any adverse drug experience associated with the Product, in
accordance with the following procedure:
(i) information concerning any adverse drug experience
associated with a Product shall be reported to ALZA's Director of
Medical Safety by telefax within twenty-four (24) hours and by hard
copy in writing three (3) days after initial receipt of such
(ii) all Product complaints not covered by (i) above shall be
reported in writing within twenty (20) calendar days following receipt
of such complaint. Such reports shall contain (a) the date the report
was received; (b) the name of the reporter; (c) the address and
telephone number of the reporter; and (d) an indication of the adverse
(a) For the period from the date of launch of the ABBOTT Sales
Call effort through the end of the initial ninety (90) day Term, AL