Indian manufacturer, Kenyan firm clash over Sh1.3b pharmaceutical deal

An Indian pharmaceutical manufacturer is locked in a dispute worth more than Sh1.3 billion with a Kenyan firm and the Pharmacy and Poisons Board (PPB), in a row over a distribution agreement.

Prism Life Sciences Limited has accused the Board of siding with Galaxy Pharmaceutical Limited by permitting it to supply products from multiple companies, while at the same time freezing the distribution of Prism’s medicines

Galaxy and the PPB, however, deny the allegations, arguing that the Kenyan court lacks jurisdiction to hear the case.

Prism’s lawyer, Elias Mutuma, told the court that the company manufactures drugs for chronic illnesses including heart disease, atherosclerosis and diabetes. He said Kenyan law allows foreign pharmaceutical firms to distribute their products only through a local technical representative, a requirement that led to Prism’s initial business arrangement with Galaxy.

However, the lawyer said that there was no agreement between Prism and Galaxy that it would manufacture its medicine in Kenya.

According to Mutuma, the relationship between the two companies was smooth between 2020 and 2022, but Galaxy later breached the agreement by sourcing products from other manufacturers without Prism’s knowledge. 

“To the Plaintiff’s utter dismay, it discovered that the first defendant had not only changed its pharmaceutical suppliers but had also indirectly acquired a pharmaceutical company by the name Prism Medico & Pharmacy Ltd from India via its subsidiary company called Galaxy Vitacare Private Limited registered in India, in which company the first defendant owned 25 per cent majority shares,” said Mutuma.

He further alleged that Galaxy began exporting products under the same brand name, using identical artwork, patterns and colour schemes on packaging. An investigation revealed that Galaxy was sourcing supplies from Ovation Remedies and Saitech Medicare Private Limited in Himachal Pradesh, India.

Mutuma claimed that some of the medicines failed quality tests conducted by a reputable Indian laboratory. Yet, when Prism complained, the PPB allegedly ignored the matter and instead quarantined Prism’s own stock—comprising 45 products—on grounds that they were suspected to be substandard.

“The plaintiff has a reasonable apprehension to the extent that the second defendant colluded with the first defendant to taint the plaintiff’s brand by using the counterfeit products to the benefit of the first defendant,” he said.

Both Galaxy and the PPB strongly denied the claims. Galaxy argued that Prism, being a foreign company, lacks the legal standing to appear before the Kenyan court.

It further argued that Prism had no manufacturing license to make any pharmaceutical products in India at the time it was filing the case.

Galaxy insisted it was never Prism’s agent but rather an independent entity that contracted Prism to manufacture and supply medicines on its behalf. It said it turned to other suppliers only after learning of what it termed Prism’s “serious breaches” in 2023.

Galaxy also denied any ties with Ovation Remedies or Saitech Medicare. Its lawyer, Pravin Bowry, told the court there was no evidence to support Prism’s allegations.

The PPB, for its part, dismissed claims of collusion. It alleged that it received information that Galaxy, through is Indian subsidiary Galaxy Vitacare PVT was exporting similar products to Prism’s.

It stated that it immediately purchased five products and did tests, which indicated they were substandard. According to the board, it quarantined all the products to prevent harm. It also argued that the tests done by Prism were irregular and illegal, as the collection was allegedly unprocedurally done.

It also said that the products, which Prism claimed to be counterfeit, were tested and cleared after passing the test.

Galaxy had separately sued both Prism and the PPB over a notice to cancel its registration certificates, but Justice Roselyn Aburili struck out that case.