LG Life Sciences and Sanofi-Aventis Korea, the local affiliate of France-based global health care company Sanofi, are mired in a dispute over a contract to copromote LG’s top-selling diabetes drugs in South Korea.

The two parties are at odds over Sanofi’s fulfillment of their contract. The case could be taken to the courts if the two sides fail to reach an agreement, according to industry watchers.

The dispute began when the biopharmaceutical unit of LG Group notified Sanofi last month that it would terminate an agreement sealed in 2012 to promote Zemiglo and ZemiMet locally.

“After an internal review, we deemed Sanofi did not properly carry out the conditions stipulated in the original contract, leading to the termination of the agreement,” an LGLS spokesperson told The Korea Herald on Tuesday.

Sanofi has expressed strong disapproval of LG’s recent actions, denying allegations that it failed to perform its obligations mandated by the agreement.

“We were abruptly notified by LG Life Sciences that it has decided to unilaterally terminate the copromotion agreement with Sanofi-Aventis Korea for Zemiglo/ZemiMet. Sanofi has performed all its contractual duties,” Sanofi-Aventis Korea told The Korea Herald in a statement.

Sanofi said it has “confirmed this fact to LGLS” and plans to “consider all necessary options” should the Korean company fail to perform its own obligations under the agreement, whose details are confidential under corporate compliance rules, both companies said.

A “sizeable period of time” remains until the contract officially expires, according to Sanofi.

Industry watchers expect the issue could be taken to the courts, as has often been the case when disputes of this type emerge in the local pharmaceutical sector.

“We would like to reach a mutual settlement and end the case in the notification stage. However, should Sanofi take legal action, we will respond with appropriate action,” the LGLS official said.

The Korean drugmaker also stressed that local sales of its diabetes drugs would not be affected by the pending dispute and that its independent global copromotion contract with the Sanofi global headquarters “remains solid.”

Meanwhile, LGLS is seeking a new partner to copromote its diabetes drugs in Korea. Daewoong Pharmaceutical is the strongest candidate among a number of companies under review, according to the company.

“We have yet to officially ink a new copromotional contract with Daewoong. We will first have to terminate our contract (with Sanofi) before any actions can be taken,” said the company spokesperson.

By Sohn Ji-young (jys@heraldcorp.com)