South African billionaire Ivan Saltzman's Dis-Chem faces Constitutional Court fight over cancer drug

Dis-Chem Pharmacies Ltd., the South African drugstore chain founded by Ivan and Lynette Saltzman, is being drawn into a Constitutional Court fight over a cheaper generic version of the prostate cancer drug Xtandi.

The Regents of the University of California, which hold the patent on enzalutamide, the active ingredient in Xtandi, and Japanese drugmaker Astellas Pharma Inc., which sells the medicine, have taken the dispute to the country's highest court. They accuse Johannesburg-based Eurolab (Pty) Ltd. and Dis-Chem, which distributes Eurolab's generic Enzutrix in South Africa, of infringing the patent. The application is due to be heard this month.

Eurolab says a year's supply of Xtandi costs nearly R361,000 ($21,700), while Enzutrix sells for R299,407 ($18,000), a gap of about R60,000 ($3,600) per patient.

How the case got here

Eurolab registered Enzutrix with the South African Health Products Regulatory Authority in January 2023. When the University of California learned of it, the university and Astellas asked Eurolab to undertake not to launch the drug for the life of the patent. Eurolab refused and went to the Commissioner of Patents, arguing that the university had not been entitled to apply for the patent in the first place. The commissioner agreed with Eurolab and revoked the patent.

The Supreme Court of Appeal overturned that ruling on March 17. It upheld the patent and dismissed both Eurolab's revocation application and a counterapplication for revocation brought by Dis-Chem. The court found that the University of California had shown a clear right and strong prospects of success, but it refused to order Eurolab and Dis-Chem to stop selling Enzutrix while the patent litigation ran its course. Patients using the cheaper drug would face an immediate and serious impact, the court said, while the harm to the patent holders would be mainly financial. The patent expired on March 29.

Damages at stake

The University of California is pursuing a multimillion-rand damages claim against Eurolab for patent infringement. Eurolab plans to ask the Constitutional Court to rule that it did not infringe the patent.

"Eurolab faces potential substantial monetary liability based on a patent," the company said in its court papers. "This is not an academic question."

In their papers, the University of California and Astellas say about $1.5 billion went into developing Xtandi and that Eurolab should not be allowed to use legal niceties to profit from their invention. "It is in the public interest that research of this sort be incentivised through the grant of patents," they said. "It is equally in the public interest that patents are not made vulnerable to attack on highly technical grounds."

Xtandi generated ¥750 billion (about R93 billion, or $5.6 billion) in sales for Astellas in its 2023 financial year. Prostate cancer accounts for 13% of male deaths in South Africa, and the cost of treating the roughly 11,000 new cases diagnosed in 2022 was estimated at R2.1 billion ($126.5 million).

The Saltzman legacy

Ivan and Lynette Saltzman opened the first Dis-Chem pharmacy in Mondeor, Johannesburg, in 1978. They built it into a chain of about 330 stores, including 285 pharmacies and 45 baby outlets, with annual revenue of more than R40 billion ($2.4 billion). Ivan Saltzman steered the company's listing on the Johannesburg Stock Exchange in 2016, when it had about 100 stores.

He stepped down as an executive director in June and resigned from the board as a nonexecutive director in July, ending more than four decades at the helm. His son Saul Saltzman left the board about a week earlier. Rui Morais, appointed chief executive officer in July 2023 as part of a phased succession, runs the company, which has a market value of about R25.5 billion ($1.5 billion).

Figures were converted at R16.6 to the dollar.