Full opinion text
OPINION SWEET, District Judge. Defendants Barr Laboratories, Inc.; Brantford Chemicals, Inc.; Bernard C. Sherman; Apotex Holdings, Inc.; Apotex Inc.; and Sherman Delaware Inc. have moved for summary judgment to dismiss the complaint of plaintiffs Geneva Pharmaceuticals Technology Corp. (as successor in interest to Invamed, Inc.) and Apothecon Inc. alleging violations of the federal antitrust laws, the New York antitrust laws, and numerous related state law claims. For the foregoing reasons, that motion is granted in part and denied in part. The Parties A. The Plaintiffs Plaintiff Geneva Pharmaceuticals Technology Corp. (“GPTC”) is a New Jersey corporation with its principal place of business in New Jersey. GPTC is in the business of developing, manufacturing and marketing generic pharmaceuticals. GPTC is a wholly owned subsidiary of Geneva Pharmaceuticals, Inc. (“Geneva”), which itself is a member of the generics sector of Novartis AG, the Austrian pharmaceutical company. Until its purchase by Geneva in December 1999, GPTC was known as Invamed, Inc. (“Invamed”). Plaintiff Apothecon, Inc. (“Apothecon”) is a Delaware corporation with its principal place of business in New Jersey. Apothe-con is a wholly-owned subsidiary of the Bristol-Myers Squibb Company (“BMS”), one of the world’s leading pharmaceutical companies, and is engaged in the business of developing, manufacturing and marketing generic pharmaceuticals. Apothecon’s approximate annual sales are $600 million. B. The Plaintiffs ’ Relationships On June 28, 1996, Invamed and Apothe-con entered into an exclusive five-year Development and Supply Agreement in connection with manufacturing and marketing a number of generic pharmaceuticals, including warfarin sodium, a generic version of the drug Coumadin® made by DuPont Pharmaceuticals Company (“DuPont”). Plaintiffs allege that this arrangement constituted a joint venture, in that the parties agreed to share profits and loss and referred to each other as “partners” and to the agreement as a “joint venture.” On December 15, 2000, Geneva’s affiliate Biochemie U.S. acquired Apothecon’s portfolio of commodity generic pharmaceutical products, and Geneva gained the right to sell (under the Geneva or Apothecon label) all of the products, including warfarin sodium, that had been previously supplied to Apothecon by Invamed. On June 7, 2001 BMS agreed to acquire the drug business of DuPont, including Coumadin®, for $7.8 billion in cash. C. The Defendants Defendant Barr Laboratories, Inc. (“Barr”) is a New York corporation with its principal place of business in New York. Barr is engaged in the business of developing, manufacturing and marketing generic pharmaceuticals. Defendant Brantford Chemicals, Inc. (“Brantford”) is a Canadian corporation with its principal place of business in Brantford, Ontario. Brantford is engaged in the business of manufacturing and marketing active pharmaceutical ingredients (“API”), chemical compounds used in the manufacture of pharmaceuticals. Brant-ford was known as ACIC (Canada) (“ACIC”) until 1996. Defendant Apotex Inc. (“Apotex”) is a Canadian corporation with its principal place of business in Weston, Ontario. Apotex is engaged in the business of researching, manufacturing and marketing both generic and branded pharmaceuticals. Apotex does not currently manufacture or market pharmaceuticals for sale in the United States. Defendant Apotex Holdings, Inc. (“Apo-tex Holdings”) is a Canadian holding company with its principal place of business in Weston, Ontario. Defendant Dr. Bernard C. Sherman (“Sherman”) is an individual residing in Canada. Sherman founded Apotex in 1974 and is the chairman of its board of directors. Sherman is also a member of the board of directors of Barr and the president of Apotex Holdings. Defendant Sherman Delaware, Inc. (“Sherman Delaware”) is a Delaware holding company with its principal place of business in Delaware. D.The Defendants’ Common Ownership Sherman owns 99% of the voting shares of Sherman Holdings Inc. (“Sherman Holdings”). Sherman and members of his family are also the beneficiaries of the Bernard and Honey Sherman Trust (“Sherman Trust”). Sherman Holdings and the Sherman Trust together own approximately 100% of the voting shares of Shermco Inc. Shermco Inc. owns 100% of Shermfam Inc., which owns 100% of the outstanding shares of Apotex Holdings. Apotex Holdings owns 100% of Apotex Pharmaceutical Holdings Inc., which owns 100% of the outstanding shares of both Apotex and Brantford. Apotex Pharmaceutical Holdings' Inc. and its affiliates have owned 75% of Brant-ford (then ACIC) since March 1990. The family of Luciano Calenti, ACIC’s president, owned the minority interest, along with institutional investors'. Apotex Pharmaceutical Holdings Inc. acquired the remaining 25% of ACIC in 1996. In 1990 ACIC was experiencing financial difficulties and Calenti turned to Sherman, a longtime client of ACIC. Sherman pursued the acquisition of ACIC as an opportunity to integrate a supplier with his operations and increase their capacity to develop chemicals. Plaintiffs claim that Sherman did not take an active interest in ACIC until 1996, when he bought out Calenti. Calenti “ran the company” himself until the buy out in July 1996. Apotex Holdings also owns 100% of Shermfin, Inc., which owns 100% of both Sherman Delaware and Glastex Investments, Inc. From 1993 to 1997, Sherman Delaware and Glastex Investments owned outstanding shares of Barr. In mid-1993, they owned approximately 66%. As of December 31, 1997, Sherman Delaware and Glastex Investments owned approximately 63% of Barr. After a Barr secondary offering in March 1998, Sherman Delaware and Glastex Investments owned approximately 48.6% of Barr. Prior Proceedings Invamed filed its complaint on February 6, 1998, alleging violations of the antitrust laws of the United States and various state law claims arising out of defendants’ alleged efforts to monopolize and restrain trade in the markets for an oral anticoagulant medication known as warfarin sodium. The complaint alleged eleven causes of action against the defendants. On April 9, 1998, Sherman, Apotex Holdings, Apotex, and Sherman Delaware moved under Fed.R.Civ.P. 12(b)(6) to dismiss Invamed’s First, Second, Third, Fourth, Eighth, and Ninth Causes of Action, claiming that there are no allegations in the complaint which would establish the basis for those claims. The Court granted this motion to dismiss with leave to re-plead. Invamed did not replead. Therefore, Invamed’s eleven causes of action are as follows. Count I and II allege monopolization and attempted monopolization against Barr and ACIC/Brantford in both the relevant war-farin sodium market and the market for clathrate, the bulk material used to make the drug. Counts III and TV allege conspiracy to monopolize against Barr and ACIC/Brantford. Count V alleges against all defendants that the acquisition of ACIC/Brantford by Apotex and, through Apotex, by Apotex Holdings, Sherman, Sherman Delaware, and Barr, violates Section 7 of the Clayton Act. Counts VI and VII allege breach of contract and promissory estoppel against ACIC/Brantford. Counts VIII and IX allege tortious interference with contract and with business relations against Barr. Counts X and XI allege negligence and negligent misrepresentation against ACIC/Brantford. Apothecon filed a separate suit on May 19, 1999, and the cases were consolidated on July 29, 1999. Apothecon included the same causes of action discussed above as well as a few additional ones. Against Barr and ACIC/Brantford, it alleged violation of the Donnelly Act, New York’s antitrust law (Count VI) and fraud (Count VIII). Further, it alleged breach of fiduciary obligation (Count XIV) against ACIC/Brantford and unfair competition against Barr (Count XV). The defendants moved for summary judgment on August 6, 2001. They filed a joint motion on plaintiffs’ antitrust claims, and ACIC/Brantford and Barr each submitted a separate motion addressing the state law claims against them. Oral argument was heard on February 13, 2002, and submissions were considered fully complete at that time. Facts The following facts are taken from the parties’ Rule 56.1 statements and, as required, are construed in the light most favorable to the non-movant, as applicable. I. Background A. Warfarin Sodium Warfarin sodium is an oral anti-coagulant medication that, in tablet form, is prescribed for the treatment of venous thrombosis and pulmonary embolism, or blood clots, particularly in patients over the age of 60. In its simplest terms, war-farin sodium thins the blood, preventing harmful clots that can cause strokes and heart attacks. A pharmaceutical product that has a narrow range between its therapeutic dose and its toxic dose is considered a narrow therapeutic index (“NTI”) product. War-farin sodium is an NTI drug. Patients for whom warfarin sodium is indicated are often high-risk patients for whom changes in their medication are viewed with great concern. Warfarin sodium possesses potential side effects that include increased bleeding. Patients taking warfarin sodium are supposed to be monitored in order to ensure that the appropriate amount of the drug is present. The active pharmaceutical ingredient (“API”) for warfarin sodium is known as “bulk” warfarin sodium or warfarin sodium clathrate (“clathrate”). Clathrate and its related compounds are also used in one form of rat poison. The United States Pharmacopoeia (“USP”) contains a list of minimum standards for the purity and composition of drugs and pharmaceuticals that are manufactured, prescribed, or sold in the United States. A drug’s strength, quality and purity are assessed in accordance with the tests and standards defined in the USP. Raw materials that meet USP standards and meet Good Manufacturing Practices guidelines are suitable for use in manufacturing finished dosage form pharmaceuticals. Clathrate itself consists of two key chemicals, 4-hydroxycoumarin and benza-lacetone (or benzylidene acetone). Both chemicals were readily available in the chemical marketplace throughout the 1990’s. It is disputed whether the process of making clathrate is simple or complex. Plaintiffs claim that it can take a supplier several years to develop a procedure for the production of clathrate. Clathrate has a shelf life of 22 months. Warfarin sodium was first introduced for human use under the brand name of Coumadin® in 1956 by Endo Laboratories, which was purchased by DuPont. DuPont lost patent protection for Coumadin® in 1962. DuPont made Coumadin® using clathrate purchased from Chemoswed A.B. (“Chemoswed”), a Swedish manufacturer. In 1995, DuPont purchased Chemoswed. Even though DuPont’s patent protection for Coumadin® expired in 1962, for the next 35 years DuPont and Coumadin® enjoyed a virtual monopoly in the market for oral anticoagulants. As a result of that position in the market, DuPont’s Couma-din® eventually achieved annual sales exceeding $400-500 million. In the 1980’s, several companies received approval to market warfarin-related products, including Purdue Frederick, Abbott Laboratories, Rosemont Pharmaceuticals, and Circa/Watson Pharmaceuticals. The FDA publishes an official directory of generic drugs known as the Orange Book. These products were not successful, and the Orange Book now lists them as discontinued. In 1990, the New England Journal of Medicine published the results of two new studies indicating that warfarin sodium was effective in preventing strokes in patients suffering from arterial fibrillation (irregular heartbeat), and in reducing strokes and subsequent heart attacks in patients who had survived a heart attack. These and similar articles spurred renewed interest in warfarin sodium by physicians and pharmaceutical companies. Four companies sell warfarin sodium in the United States today: (1) DuPont, which has marketed Coumadin® since 1956; (2) Barr, which has marketed generic warfarin sodium since July 1997; (3) Geneva (as successor to plaintiffs), which has marketed generic warfarin sodium since October 1998; and (4) Taro Pharmaceutical Industries Ltd. (“Taro”), which has marketed generic warfarin sodium since September 1999. All generic warfa-rin sodium available in the market today is therapeutically equivalent to Coumadin® and bears the FDA’s equivalence rating “AB.” The process of achieving this rating is described below. Invamed/Apothecon and Barr have been and continue to be competitors with respect to warfarin sodium and finished dosage form pharmaceutical products in general. B. Generic Pharmaceutical Drugs 1. Development To develop any generic drug, a pharmaceutical company must first procure the raw materials necessary to make the drug, including its API. Numerous companies manufacture APIs for sale to the pharmaceutical industry. In the developmental stage, pharmaceutical companies typically obtain small quantities of API (generally less than 1 kg) and technical product information from API suppliers for initial analysis and testing. A sample is typically a small quantity measured in grams and is usually provided free of charge. Following evaluation of the initial samples, pharmaceutical companies typically obtain developmental or “R & D” quantities of the API to begin dosage form development and initial formulation analysis. An R & D quantity is smaller in size (e.g., 1-25 kg) than larger “commercial” quantities (e.g., more than 50 kg) that are later used to put the finished-dosage product into commercial production. R & D quantities and commercial quantities frequently differ in price. Generic drug manufacturers obtain FDA approval for generic forms of innovator or branded drugs by filing an Abbreviated New Drug Application (“ANDA”), which includes information demonstrating that the subject drug is bioequivalent to the branded drug. An ANDA must contain information to show that the generic product has the same active ingredient, conditions of use, route of administration, dosage form, strength, and labeling as the branded drug. The FDA requires pharmaceutical companies to identify in the ANDA the API supplier or suppliers they intend to use in manufacturing the product. Plaintiffs claim that applicants tend to specify only one supplier of its pharmaceutical ingredients so as to minimize the time taken by the FDA for its review and approval. API from a different source can be substituted only upon FDA approval of a supplement or amendment to the ANDA. The FDA classifies as “therapeutically equivalent” those products that meet the following general criteria: (1) they are approved as safe and effective; (2) they are pharmaceutical equivalents; (3) they are bioequivalent; (4) they are adequately labeled; and (5) they are manufactured in compliance with Current Good Manufacturing Practice regulations. The FDA rates a generic product “AB” equivalent to its branded counterpart if a study is submitted demonstrating bioequivalence to the branded product. Despite this, there may be physical differences between branded and generic drugs, such as the particle size of the active pharmaceutical ingredient, water content, and crystalline structure. A different process is used to manufacture generic products and that process may lead to other differences. API suppliers submit Drug Master Files (“DMFs”) to the FDA, which summarize the equipment, manufacturing steps, raw materials and laboratory controls used to prepare the particular API. In a DMF “reference letter,” the API supplier commits to the FDA that it will manufacture its material as set forth in its DMF. In the letter (which is sent by the supplier to the FDA), the supplier authorizes the FDA to refer to its DMF in connection with an ANDA filed by the drug manufacturer. The FDA reviews a supplier’s DMF in conjunction with its review of the pending ANDA. If both are in order, the drug will be approved for marketing. Because of the need for approval to change suppliers after approval, plaintiffs allege that it is a widespread practice throughout the industry that a supplier providing a reference letter commits itself to providing commercial quantities of the raw material. Plaintiffs also allege that throughout the 1990’s it was also practice to rely on informal oral arrangements, rather than written supply contracts. For example, more than 90% of the bulk pharmaceutical ingredients purchased by Barr, and the majority of bulk pharmaceuticals sold by ACIC/Brantford, do not involve written supply agreements. 2. Equivalence of Branded and Generic Warfarin Sodium Generic warfarin sodium products that are rated AB by the FDA are therapeutically equivalent to the brand product and by approving the products for marketing, the FDA has certified both Barr’s and plaintiffs’ product as chemically and therapeutically equivalent to the innovator’s product, Coumadin®. Plaintiffs’ and Barr’s generic warfarin sodium products are, therefore, fully interchangeable with each other and with Coumadin®. In its interrogatory responses, Invamed stated that it is not aware of any reason why any of the three warfarin sodium products “should not be substituted for any of the others.” Apothecon, in response to interrogatories asking whether plaintiffs’ product, Barr’s product, and Coumadin® may be substituted or are interchangeable, stated that it is not “aware of any reason why any of the three ... warfarin sodium products should not be substituted for any of the others.” In Invamed’s ANDA, Section II, captioned “BASIS FOR ANDA SUBMISSION,” Invamed stated that its “WARFA-RIN SODIUM TABLETS USP ... are the same as the listed drug COUMADIN TABLETS ... manufactured by DuPont....” Both Barr and Apothecon conducted clinical studies demonstrating that their products were clinically interchangeable with Coumadin®. In addition, both Apothecon/Invamed’s warfarin sodium product and Barr’s warfarin sodium product contain the same labeling and identical prescribing information as that used with Coumadin®. Coumadin® uses different tablet colors to correspond "with and signify ' different dosage sizes. Barr and Apothecon/Invamed use the same colors as Coumadin®. Generic warfarin sodium and Couma-din® are sold to the same customers: wholesalers, hospitals, retail pharmacy chains, mail order houses, clinics, and managed care organizations. II. Barr’s Generic Warfarin Sodium A. Barr’s Development Barr’s business strategy is to be the first or second manufacturer to enter the market for a particular generic product. To accomplish this goal, Barr chooses products with high barriers to entry so that the company will face limited competí-' tion. In the early 1990’s, Barr identified war-farin sodium as a product where there were barriers to entry because of the difficulty of obtaining a supply of the raw material necessary to produce the product. Barr researched potential API suppliers at that time. In January 1991, Ed Cohen, Barr’s president, and Luciano Calenti, ACIC’s founder and president, discussed a potential 20 kg order of clathrate. Calenti confirmed that ACIC could produce commercial quantities of clathrate for $2,000 per kilogram, and the initial 20 kg for $2,500 per kilogram. Calenti said a 50% advance payment would be required to ensure that Barr would not rescind the order. On February 5, 1991, Cohen confirmed Barr’s interest to Calenti, sent ACIC its purchase order for 20 kg of clathrate, and offered to lend any analytical support needed in developing purity specifications for the product. The day after Barr’s order, ACIC began process development work on warfarin sodium. ACIC developed an acceptable process for synthesizing warfarin sodium by the spring of 1991. Barr next ordered 7 kg of clathrate from ACIC in June 1993, and another 10 kg in May 1994. ACIC filed a DMF for clathrate with the FDA on March 15,1995. On April 3,1995, ACIC provided a DMF reference letter for clathrate to the FDA in support of Barr’s warfarin sodium ANDA. On May 10, 1995, Barr filed its ANDA, listing ACIC as its clathrate supplier and including its DMF reference letter. In September 1995, Barr entered into an agreement with ACIC for the supply of clathrate. Barr ordered 900 kg of clath-rate from ACIC on September 29, 1995. ACIC shipped that quantity to Barr in December 1995. In September 1996, Barr ordered an additional 900 kg of clathrate from ACIC (by that time known as Brant-ford). This quantity was shipped to Barr in separate lots in February 1997. On March 26, 1997, the FDA approved Barr’s ANDA and authorized the company to begin marketing, which it did beginning July 28, 1997. The FDA’s approval of Barr’s product was premised on the determination of the FDA’s Division of Bioequi-valence that Barr’s “Warfarin Sodium Tablets” were “bioequivalent and, therefore, therapeutically equivalent to the listed drug” Coumadin®. Consequently, Barr announced in an early advertisement that its warfarin sodium tablets were “[t]hera-peutically equivalent to Coumadin®” and that “[t]he only difference is cost.” On August 8, 1997, Barr submitted a purchase order for another 900 kg of clath-rate. ACIC/Brantford shipped this quantity to Barr in separate lots in January and April 1998. In a document dated September 1997, Barr referred to ACIC/Brantford as the “only source [of clathrate] available to the generic industry.” Barr also attempted to locate a back-up producer of clathrate. As of March 1998, Barr had been unable to locate an FDA-approved supplier. B. The Supply and Confidentiality Ayreements In the summer of 1995, Barr and ACIC began discussions regarding a supply agreement for commercial quantities of clathrate. ACIC demanded an arrangement in which a pharmaceutical company would pay for a substantial amount of clathrate prior to receiving FDA approval. Calenti told Barr that if Barr did not strike an agreement with ACIC, Calenti would try to make one with another company. 1. The Supply Agreement By letter agreement dated September 19, 1995 (the “Supply Agreement”), Barr and ACIC contracted for ACIC to supply Barr with clathrate. The Agreement obligated Barr to purchase 900 kilograms of clathrate from ACIC for $1.8 million regardless of whether it could use the product or not. The Supply Agreement was negotiated as an arm’s length transaction, and at the time it was signed, Barr’s President, Bruce Downey, was unaware of any relationship between ACIC/Brantford and Apotex or Sherman. The Supply Agreement provided that ACIC would exclusively supply Barr with commercial quantities of clathrate in the U.S. until another manufacturer began selling generic warfarin sodium. Barr agreed to purchase 100% of its commercial requirements from ACIC during the exclusivity period. As to delivery requirements, the Supply Agreement provided that “ACIC will supply the [clathrate] in quantities requested by Barr, provided that Barr provides ACIC with lead times consistent with its normal operations.” Because the Supply Agreement applied only to commercial quantities of clathrate, it did not prohibit ACIC from selling sample or developmental quantities to other generic manufacturers seeking FDA approval of their products. In addition, because the Supply Agreement applied only to clathrate manufactured in ACIC’s facilities, it did not prevent ACIC from brokering clathrate manufactured by other suppliers. The Supply Agreement also permitted ACIC to supply commercial quantities to DuPont. Finally, the Supply Agreement permitted Barr, at its option, to purchase sufficient quantities of clath-rate from another supplier in order to qualify that supplier as an alternate source. 2. The Confidentiality Agreement On October 5, 1995, approximately seven days after the Supply Agreement was signed, Barr and ACIC executed a Confidentiality Agreement restricting disclosure of “valuable, proprietary, technical, commercial and other confidential information” for five years. This agreement precluded ACIC/Brantford from disclosing to In-vamed or any other entity the existence of the exclusive supply contract. It was also ACIC’s practice to keep all of its contracts and commercial transactions with its customers confidential. Soon after these agreements were signed, ACIC removed clathrate from its internal products list, and Calenti advised his sales representatives to stop promoting it to new clients. Plaintiffs claim that if they had known about the exclusive arrangement, they could have sought another supplier in 1995 and entered the market in a timely fashion. III. Invamed’s Attempts To Secure A Supply Of Clathrate Between 1993 and 1996, Invamed explored the possibility of obtaining clathrate from a number of different sources. In-vamed’s vice president, Dr. Mahendra Patel (“Patel”), was responsible for the company’s research and development efforts for new drugs, including warfarin sodium. Patel co-founded Invamed in 1983 after several years in the pharmaceutical industry, including six years at BMS. It was Patel’s responsibility to identify and select potential API suppliers. Plaintiffs claim that Invamed concluded that ACIC/Brant-ford was the only viable supplier. A. Chemoswed A.B. In December 1994, Invamed received a 10-gram sample of clathrate made by Che-moswed, together with technical product information. The supporting technical information indicated that the Chemoswed clathrate was USP grade material and suitable for testing in an Invamed finished product. In early 1994, Invamed performed one product development trial using the Chemoswed clathrate. At the time, Chemoswed supplied clath-rate to DuPont for use in its manufacture of Coumadin®. In 1995 DuPont purchased Chemoswed. Plaintiffs claim that it was widely understood throughout the industry that Chemoswed would not be willing to sell commercial quantities to a generic manufacturer. During 1995 to 1998, defendants claim that Chemoswed/DuPont received inquiries from at least two pharmaceutical companies, JLM and Rosemont, regarding clathrate. The price quoted to these entities was $30,000 per kilogram. Patel did not request material from Chemoswed/Du-Pont, stating that “it was not worthwhile” because “[w]e won’t get the material.” B. Medea Research Laboratories Medea Research Laboratories, Inc. (“Medea”) provided 5 kilograms of clath-rate to Invamed on January 11, 1994, and provided Invamed with a DMF reference letter on February 16, 1994. Medea’s DMF for clathrate had been filed with FDA in August 1993. Although Invamed found Medea’s clathrate suitable for use in its warfarin sodium tablets, Invamed returned the 5 kg order for credit in September 1994. Sometime after Invamed received Medea’s material, Medea’s plant was destroyed by fire. C. Hoechst Celanese On September 30, 1994, the API manufacturer Hoechst Celanese (“Hoechst”), a unit of Hoechst A.G., shipped Invamed a 100-gram sample of clathrate together with technical information. Hoechst manufactured clathrate at its facility in Coventry, Rhode Island. Invamed had previously dealt with Hoechst for ibuprofen API. Invamed’s discussions with Hoechst continued in late 1995 and early 1996, as discussed below. D. ACIC 1. Invamed’s Relationship with ACIC Invamed first became a customer of ACIC in the late 1980’s or early 1990’s. Sergio Getrajdman, ACIC’s U.S. sales representative, (“Getrajdman”) was responsible for sales to Invamed and reported to Calenti. Getrajdman, who operated out of an office in New Jersey, where Invamed was located, sold Invamed a variety of products, including atenolol, cimetidine, and nadolol, which ACIC either brokered for others or manufactured itself. a. Atenolol ACIC sold Invamed atenolol acting as broker for the manufacturer ICI, which was located in Italy. Dr. Pankaj Dave, Invamed’s regulatory manager who joined the company in 1983 (“Dave”), contacted Getrajdman in advance of his purchase orders to discuss price, quantity and delivery dates for the material, and kept ACIC informed of the status of its ANDA approval. In March 1994, after discussing with ACIC Invamed’s requirements for the remainder of the year and negotiating price and payment terms, Dave submitted a purchase order for 10,000 kg of atenolol. ACIC confirmed the purchase order with its supplier and arranged for shipment of the first 500 kg. After receiving several shipments through the next year, Invamed canceled the purchase order in June 1996 with an undelivered balance of more than 7,000 kg. b. Nadolol On January 3, 1995, after discussing In-vamed’s commercial requirements with Ge-trajdman, Dave submitted a $1.8 million purchase order for 2,500 kg of nadolol, the first 500 kg to be delivered in mid-March 1995. Although multiple shipments were made through the next year, the product was often unavailable. In June 1996, In-vamed canceled the purchase order with an undelivered balance of more than 1,500 kg. c. Cimetidine ACIC sold Invamed cimetidine acting as broker for the manufacturer, Signa, in Mexico. In June 1993, Dave requested prices, technical information and samples. On October 7, 1993, Dave requested a price for 100 kg, was quoted $65 per kilogram, and followed up with a purchase order the next day. In February 1994, ACIC provided Invamed a DMF reference letter for the product. In May 1994, In-vamed advised ACIC it had submitted its cimetidine ANDA and to prepare for an FDA inspection. In February 1995, Dave advised Getrajdman that Invamed would require 5,000 kg for its product launch, tentatively scheduled for July, and the parties discussed pricing on a target quantity of 45,000 kg per year. In April, Dave submitted a purchase order for 4,000 kg of cimetidine and advised Getrajdman that Invamed expected FDA approval within the next two weeks. On May 13, 1995, Dave wrote Getrajd-man requesting a cimetidine delivery schedule for June, and discussed projections for future deliveries. In light of product quality problems at the Signa plant, by September 1995 Invamed had refused delivery of cimetidine and held back payment for nadolol. On September 28, 1995, Getrajdman wrote Dave insisting on payment for nadolol and that Invamed accept and pay for shipments of cimeti-dine. In December Invamed submitted a purchase order for 5,000 kg of cimetidine, and in January 1996 sought an agreement from ACIC to supply 75,000 kg for the next two years. By letter dated January 4, Patel sought a fixed price of $100 per kilogram for the first year, and, the same price for the second year for the first 75 tons and afterward a price of $90 per kilogram. Days later, however, after Getrajdman sent a draft agreement to Dave, Invamed issued a purchase order to ACIC for only 20,000 kilogram. Ultimately, Invamed stopped making the product. 2. Clathrate On September 20, 1994, Dave discussed the availability of clathrate with Getrajd-man, who told him there was no exclusive on the material and that ACIC could provide it to Invamed. The next day, Dave telephoned ACIC for a price on 5-10 kilograms of clathrate and was quoted an approximate price of $2,500 per kilogram. On September 26, 1994, ACIC sent Invamed clathrate samples of lg and lOg, and technical information, free of charge. Invamed also received research and development quantities of clathrate in February 1995 and March 1995, free of charge. ACIC/Brantford provided the samples free of charge in anticipation of selling Invamed substantial quantities of clath-rate if Invamed successfully developed warfarin sodium. Invamed also purchased 15 kilograms of clathrate from ACIC/Brantford in February 1995 and an additional 5 kilograms in July 1995, at a price of $2500 per kilogram. The February 1995 purchase order contained an attachment requesting a variety of other information and materials in addition to the requested quantity of clath-rate. On March 7, ACIC shipped the 15 kg clathrate order, and on March 21 it shipped the three additional 50-gram samples with requested information. On April 3, 1995, ACIC sent the FDA a DMF reference letter as requested in the purchase order and attachment. The same day, ACIC sent a copy of the letter to Invamed. It stated: Dear Sir, Re: WARFARIN SODIUM DMF # 11387 Authorization is hereby given to the Food and Drug Administration to refer to our Master File for WARFARIN SODIUM on behalf of: INVAMED, INC. 2400 Route 130 North Dayton, NJ 088100 — U.S.A. In support of any new drug application they may file on pharmaceutical preparation containing the drug manufactured by us. ACIC (CANADA) INC. herewith commits itself to manufacture all of their pharmaceutical products in accordance with the current good manufacturing practices and by the methods described in this specific Drug Master File, and to issue a new DMF reference letter after each amendment on the above Drug Master File. The letter constitutes a commitment to the FDA to manufacture clathrate in accordance with the requirements outlined in the DMF and the industry requirements if ACIC manufactures the product. Plaintiffs claim that the sending of this letter also constituted a commitment that ACIC/Brantford would supply commercial quantities of clathrate to Invamed. However, the letter contains no language by which the manufacturer commits to supply the purchaser with the subject materials, although manufacturers can include such language in DMF letters. Further, In-vamed did not consider itself obligated to purchase clathrate from all of the companies from which it obtained samples and DMF referral letters such as the one above. On July 21, 1995, Dave submitted a second standard purchase order and attachment to Getrajdman for 5 kg of clathrate, and requested ACIC’s safety and handling procedures for the product. ACIC faxed the requested information to Invamed on July 24, and Invamed received the shipment early in August. On or about August 23, 1995, Getrajd-man allegedly tried to discourage Invamed from pursuing its ANDA submission for warfarin sodium “on the pretext that others were ahead of him and his market share would thus be proportionally smaller.” In January 1996, Dave placed an order for an additional 12 to 14 kilograms of clathrate from ACIC/Brantford to perform tests on a particular machine. Getrajd-man advised Invamed that he did not know when availability would allow ACIC to accept an order for clathrate, and that he would have to check with Calenti. In a fax sent the next week, Dave asked Getrajd-man to “let him know” so he could submit a confirming purchase order. The January 1996 order was never fulfilled, and Invamed concluded that the failure to deliver was a result of “poor communication” between the two companies or that ACIC/Brantford was “too busy” to fill a small order. The principals of Invamed did not consider the failure to be serious. In place of ACIC/Brantford’s clathrate, In-vamed used non-FDA approved material it received from Hoechst. Before 1996 and in 1996, Patel told Ge-trajdman that Invamed was working with ACIC/Brantford’s material and would be filing its ANDA with it. Plaintiffs claim that Invamed also specifically advised ACIC/Brantford that it would be obligated to supply commercial quantities of clath-rate when Invamed’s ANDA was approved. Sometime in 1995, Getrajdman told Patel that ACIC/Brantford was one of the suppliers that had clathrate available and that when Invamed placed its order ACIC/Brantford would provide the material. Plaintiffs also claim that ACIC/Brant-ford “repeatedly assured” Invamed that it would supply commercial quantities of clathrate to it on numerous occasions in 1996. Plaintiffs claim that as part of this implied-in-fact contract, Invamed and ACIC agreed on the price and on a “commercial quantity.” Further, Patel testified that as part of the agreement, Invamed had to give commercially reasonable notice of its orders. They did not agree on delivery dates. ■ By January 1996, ACIC/Brantford advised Invamed that it was looking to other API suppliers as possible replacement sources of clathrate for Invamed. At that time, Getrajdman told Dave about a possible switching of the manufacturing to Sig-na in Mexico to obtain clathrate for In-vamed. On May 29,1997, Getrajdman also advised Patel about a possible clathrate source in Italy, but Patel did not want to pursue that option. On February 14, 1996, Dave sent a fax to Antoniette Walkom, ACIC’s manager of regulatory affairs (“Walkom”), requesting that she provide “information with reference to Warfarin Sodium as requested by the FDA.” Later the same day, Dave sent another fax to Walkom stating: “I feel that we have not been treated right and it seems to me that you are not dealing in good faith. I have some important questions regarding WARFARIN SODIUM BULK DRUG SUBSTANCE.” Walkom forwarded the technical information to Dave on February 16 and 27, noting her displeasure with the tone and content of his fax. In September 1996, after the sale of Calenti’s remaining shares of ACIC to Apotex was complete, ACIC/Brantford issued letters to some companies to which it had provided DMF reference letters, advising them of the change. The letter directed commercial inquiries to Brant-ford’s new sales agent, ACIC Fine Chemicals. Invamed received a letter dated September 27, 1996, with regard to the three ACIC APIs on which it held a reference letter, including clathrate. The letter stated that “[w]e would like to emphasize that the facilities, premises, and procedures as described in the respective files remain unchanged.” The letter also asked recipients to inform Brantford of any products that had become inactive in order to update its records. Invamed responded on October 4, 1996, and advised Brantford that each of these APIs was in active status. Invamed’s letter did not inform Brantford that it had filed its ANDA for warfarin sodium or that it had utilized Brantford’s DMF reference letter. It did request that the reference letter for clathrate “continue to be maintained.” In the spring of 1997, Dave asked Ge-trajdman for 100-150 kilograms of clath-rate. Getrajdman explained that ACIC/Brantford would be able to deliver such material as soon as the FDA approved two generic manufacturers’ AN-DAs for warfarin sodium. He provided no explanation of why there had to be two approvals, but stated that he may be able to provide clathrate before then. In fact, because of the exclusive supply contract with Barr, ACIC/Brantford could not supply a commercial quantity of clathrate until another generic manufacturer besides Barr was selling warfarin sodium. Thus, in effect, the FDA would have approved two generic warfarin sodium manufacturers at the time ACIC/Brantford could supply a commercial quantity of clathrate. At or about this time, Patel informed Yashvant Patel that Invamed was having clathrate supply problems and that In-vamed would have to “play this right” so that it would not be “cut off from the raw material supply.” Patel was worried that if Invamed put too much pressure on ACIC for the material, Invamed’s DMF access letter could be withdrawn. According to Patel, withdrawal of the access letter would have a “catastrophic effect on the company versus having the DMF and ANDA maintained” because “the ANDA would be kicked out and we’d be starting from ground zero.” Patel elected to wait until after the FDA approved Invamed’s ANDA to pressure ACIC. E. Banyan Chemicals By May 1995, Invamed had decided to develop a process to produce clathrate internally and to transfer that knowledge to Banyan Chemicals (Private) Ltd. (“Banyan”), an Indian API manufacturer located in Baroda, India and formed in the early 1990’s. 1. The 1992 MOU On February 4, 1992, Invamed and Banyan executed a Memorandum of Understanding (“Memorandum”) regarding the development and supply of APIs by Banyan for Invamed. The Memorandum included provisions regarding product development, transfer of technology, training of personnel and the manufacturing and marketing of several bulk active drug substances. Under the Memorandum, which was to run seven years, Banyan agreed to manufacture three APIs for Invamed, supply Invamed’s requirements of these APIs on an exclusive basis in the U.S., and develop such other drug substances that Invamed requested. The Memorandum further provided that all information transferred between Invamed and Banyan pursuant to the agreement would not be disclosed to third parties and would be kept “secret.” 2. The May 1995 Addendum On May 16, 1995, Invamed and Banyan executed an Addendum to the Memorandum of Understanding (“Addendum”) that expanded the list of products covered by the original 1992 agreement to include clathrate. Invamed included warfarin sodium as one of the products covered by the Addendum because it had begun the product development process for warfarin sodium, wanted to pursue the product for eventual commercialization, and because it was “good business practice” to have a second source for clathrate. Invamed had a policy of having two raw material suppliers for every approved drug if possible. To compensate Banyan for expenses incurred in modifying its plant to facilitate the manufacture of clathrate, Invamed agreed to “purchase [clathrate] from Banyan ... at a premium to the prevailing world market prices ... until such time as the additional costs are recouped by Banyan. ...” The Addendum also provided that In-vamed “shall be required to purchase 80% of its annual requirements for [clath-rate] from Banyan after receiving formal approval from the U.S. Food and Drug Administration,” and gave Invamed “the option to purchase 100% of the annual requirements for [clathrate] from Banyan.” It also provided that “Banyan shall not sell any quantity of the Products directly to the U.S. market, nor shall they enter into any agreements to supply the Products to any third party for sale into the U.S. market for the duration of [the] Agreement.” The advantage to Invamed of entering into an exclusive relationship with Banyan was that Invamed would have a guaranteed supply of raw material, and would be guaranteed the quantity of raw material it required without having to share Banyan’s production capacity with other customers and risk the nonavailability of raw materials. At the time, Invamed did not tell ACIC of the Banyan contract, as was consistent with Invamed’s business practice. In addition, Invamed’s rights and obligations relating to clathrate would come into existence only if and when Banyan produced clathrate and supplemental ANDA approval. In 1995, Banyan had not produced clathrate and did not know how to do so. Invamed did not consider Banyan to be a viable supplier because it was not capable of producing warfarin sodium so as to permit Invamed to obtain FDA approval and enter the market in a timely fashion. Banyan’s factory was completed in the first quarter of 1997, and Banyan filed a DMF for clathrate in mid-1998. F. Other Potential Suppliers Defendants claim that other suppliers were able to supply clathrate or could have gained the competence to supply clathrate besides the ones mentioned above. 1. Taro Pharmaceuticals Since 1996, Taro Pharmaceuticals Industries Ltd. has manufactured clathrate that conforms to USP standards. During each year from 1996-1998, Taro manufactured between 25-50 kilograms of clathrate for sampling purposes and for research and development. On November 18, 1997, Taro submitted a DMF to the FDA for clathrate. Taro has had no dealings with Invamed with respect to clathrate. Invamed was aware of Taro at least by 1997, when Taro attempted to contact Invamed. Patel did not return Taro’s telephone calls because he did not want to divulge any information on warfarin to Taro. Taro launched its own finished-dosage generic warfarin sodium tablets in the United States in September 1999, using its own internally developed source of clath-rate. Plaintiffs dispute whether Taro had the capacity to manufacture 400 kilograms of clathrate for other customers and whether Taro has offered to sell clathrate to other pharmaceutical companies. 2. API Manufacturers Willing to Produce Clathrate a. Diosynth!Rosemont Since 1996, Diosynth has been capable of manufacturing commercial quantities of clathrate if provided with a non-infringing process, synthesis or formulation by a pharmaceutical company. Since 1997, through its own internally developed process, Diosynth has been capable of supplying pharmaceutical manufacturers with sufficient quantities of clathrate so that they could engage in the commercial development and manufacture of warfarin sodium tablets. In September 1999, Diosynth filed a DMF for clathrate. Diosynth has had no dealings with In-vamed or Apothecon with respect to clath-rate. Invamed did not pursue Diosynth as a source for clathrate because of “the ownership between Rosemont and Akzo [-Nobel].” Patel also testified that before February 1998 he did not know that Diosynth was a potential supplier. b. Chemagis Chemagis offered to manufacture clath-rate for Invamed. Plaintiffs dispute whether it was capable of timely doing so. c. Lachema In December 1997, Invamed received samples of clathrate from Lachema, which filed in December 1996 for a DMF for clathrate. Invamed tested the samples and determined them to be suitable for use. On February 26, 1998, Invamed placed an order with Lachema’s agent Chemapol for 15 kilograms of clathrate for research and development. Invamed revised the terms and conditions attached to a purchase order for Lachema. The revised attachment included several new provisions: In an event, LACHEMA a.s. decides to discontinue the manufacturing of WAR-FARIN SODIUM CRYSTALLINE CLATHRATE USP, LACHEMA a.s. guarantees to supply this material for a period of not less than eighteen (18) months, or until an alternate source is qualified by Invamed and approved by U.S. FDA, whichever is longer. ;¡; # :J{ íjs s¡{ LACHEMA a.s. agrees to maintain a continuous supply of [the API] to satisfy the future requirements of Invamed Inc. except for: a) Causes beyond its reasonable control b) acts of God The supply of WARFARIN SODIUM CRYSTALLINE CLATHRATE USP by Lachema a.s. to Invamed shall be construed as an acceptance by Lachema a.s. of all terms and conditions of this agreement. At the advice of counsel, Invamed included this language because it wanted to ensure continuity of supply. Lachema issued a DMF reference letter to Invamed in March 1998. At least one internal Lachema document states that, as of March 1998, Invamed was “prepared to enter into a 3 to 5 year Contract for supplies of Warfarin Sodium Clathrate.” The document further states that Lachema agreed to “maintain a continuous supply of [clathrate]” (200-300 kg per month) “to satisfy the future requirements of In-vamed.” Invamed never received the 15-20 kilograms of clathrate it ordered from Lache-ma. When the material was not delivered for 6-9 months, Invamed learned from Lachema that the “Eastern Europe block bureaucracy” had accounted for the delay. Invamed then rejected the offer to take the material. d. Arenol During the 1995-97 time-frame, Arenol manufactured APIs including amphetamines and methamphetamines. Based upon one eight hour shift per day, five days per week, Arenol’s plant was capable of producing 5,000 kilograms of any API in a given year. Arenol could have increased this capacity by adding shifts, if it so desired. However, Arenol never filed a DMF for clathrate and plaintiffs dispute that Arenol had the ability to produce clathrate in 1995. Arenol engaged a consulting chemist to develop the process for producing clath-rate in 1997. The chemist developed a procedure for the commercial manufacture of clathrate in mid-1998. Using the chemist’s process, Arenol manufactured three 15 kg pilot batches of clathrate. The batches that were manufactured were USP compliant. In 1997, Apothecon’s Doug Hamilton learned that Medea had transferred its warfarin sodium technology to Arenol and that Arenol had manufactured USP-grade batches of clathrate and had 10 to 12 DMFs on file for other products. Arenol informed Hamilton that Arenol could produce USP-grade clathrate batches by the first quarter of 1998. In August 1998, a fire destroyed Arenol. e. Vinchem In December 1997, Vinchem, a broker of raw materials, offered Invamed an exclusive clathrate supply contract in November 1997, and offered to supply 15 kg of clath-rate in three shipments of 5 kg each, beginning in March 1998. Invamed ultimately decided not to pursue Vinchem because Patel believed Vinchem would not be a viable supplier of clathrate. Invamed did not investigate to determine whether Vin-chem had access to a viable source of clathrate. Prior to this time, Invamed had purchased other APIs from Vinchem. IV. Invamed Turns To Hoechst For Additional Clathrate To Complete Its Product Development Beginning in December 1995, Invamed began discussions with Hoechst, which had by then developed an acceptable process for manufacturing clathrate. In early 1996, Hoechst completed product development work at its Coventry, Rhode Island facility. Hoechst then determined it would be able to manufacture approximately 1,000 kilograms of clathrate per year. At the time, Hoechst was willing and able to enter into a long-term supply contract with Invamed for clathrate. Hoechst, however, wanted an exclusive supply agreement, to which Invamed would not agree. The parties also could not agree on a firm price. As a result, Hoechst would only sell Invamed clathrate on a “spot” basis, from purchase order to purchase order. On January 12, 1996, Invamed submitted a purchase order to Hoechst for 14 kg of clathrate Invamed needed for its warfa-rin sodium development work. Unlike its standard purchase order, however, and despite the lack of any prior agreement, In-vamed included a handwritten notation on the face of the purchase order that read: “It shall be obligatory on the part of Hoechst Celanese Corporation to supply the material as of now and for a period of three years after the approval of the ANDA and in case Hoechst Celanese decides to discontinue product a period until an alternate source is qualified and approved by the FDA.” The attachment also required Hoechst to supply a DMF referral letter. On January 17, 1996, Hoechst’s sales representative, Gary Moss (“Moss”), advised Dave and Patel that the additional “obligation” language in the purchase order was unacceptable. Moss further advised that Invamed’s order would be put on hold until some “significant items” were resolved, including the state of Hoechst’s production, the progress on its DMF and technical materials (which were months away), and the price of the product. Ultimately, Hoechst returned the revised purchase order to Invamed with the language regarding the supply obligation stricken, and shipped the product. On March 29, 1996, Invamed submitted a purchase order to Hoechst for 8 additional kilograms of clathrate. The purchase order contained no commitment language. Invamed submitted the purchase order to Hoechst because ACIC/Brantford had not responded to its earlier request and because Patel believed ACIC would not supply that amount to Invamed. Invamed used this Hoechst material for its warfarin sodium development, and in April began manufacturing warfarin sodium tablets using Hoechst’s clathrate to complete its product development work and its ANDA. Patel stated that “Hoechst was a suitable alternative to ACIC.” V. Invamed Files Its Warfarin Sodium ANDA On June 14,1996, Invamed submitted its ANDA for warfarin sodium to the FDA. Invamed listed ACIC as its source for raw material and included the DMF reference letter ACIC had sent in April 1995. Plaintiffs relied on the alleged repeated representations by ACIC/Brantford that it would supply commercial quantities of clathrate to Invamed and the purported industry practice that it would do so. On June 28, 1996, Invamed and Apothe-con entered into an exclusive five-year Development and Supply Agreement in connection with the manufacture and marketing of a number of generic pharmaceuticals, including warfarin sodium. In that agreement, Invamed contracted to manufacture warfarin sodium for Apothecon, which Apothecon would then market to its customers. Invamed received $2.1 million up front and was to be paid a transfer price for the tablets it made for Apothe-con plus a percentage of the profits. The timetable attached to the agreement targeted June 1997 as the date for FDA approval of Invamed’s ANDA for warfarin sodium, and listed August 1995 as the date the “drug substance vendor” had been “contracted.” As of August 1995, In-vamed had executed a written contract with only Banyan, which did not have the capability of producing clathrate at the time. On July 29, 1997, Getrajdman e-mailed a press release to Dave regarding Barr’s launch of warfarin sodium. In his e-mail, Getrajdman indicated that he would “commence [his] pressuring of the manufacturer again, as they promised to review the possibilities after launch.” Also on July 29,1997, after Invamed and Apothecon held a warfarin marketing meeting, raw material sourcing remained as an item requiring action from Invamed. A subsequent Apothecon warfarin launch proposal similarly noted “Raw Materials Still Not Secured” and further listed “Secure Raw Materials!” as the first of many items on a list entitled “What We Need To Do.” In late September, Dave and Patel informed Doug Hamilton, Apothecon’s Director of Sourcing (“Hamilton”), that they expected ANDA approval any day, but that Invamed had no contract in writing with ACIC/Brantford. Hamilton was also informed that pricing on clathrate was “[approximately] $3500/kg ... Invamed even fuzzy here.” Invamed also identified its plan to obtain clathrate: “get approval then place order with ACIC. Take things from there.” By this time, Apothecon had forecasted 1997-1999 warfarin sodium sales of between $87 million and $112 million. VI. Invamed Arranges For Other Clathrate Suppliers Alter The Submission Of Its ANDA A.Invamed Requests Additional Clathrate from Hoechst In July 1996, Invamed provided information about its ANDA filing and relayed its clathrate needs and timing to Gary Moss of Hoechst. As Moss reported in a memorandum to his supervisor, Invamed’s original plan “was to submit their ANDA based on” other clathrate and substitute Hoechst’s material “at the appropriate time to the FDA without losing time on the ANDA/SNDA approval.” Moss wrote that Invamed never communicated the exact need of volume and time when asked on two separate occasions until July. He also stated that Patel threatened to go to ACIC if Hoechst could not supply clath-rate by November. Hoechst submitted its DMF for clathrate in August 1996. B. Invamed Develops A Manufacturing Process For Clathrate In July 1996, Patel asked Dr. Chandra Kasireddy, one of Invamed’s senior research scientists (“Kasireddy”), to develop a process for manufacturing clathrate. Patel intended to provide this process to another supplier that would manufacture the product for Invamed. By November 1996, Dr. Kasireddy had performed several tests and found it a “simple process” to prepare clathrate in conformance with In-vamed’s specifications. Kasireddy prepared a document that summarized his process. C. Invamed Hires A Broker To Locate Manufacturers Invamed hired Ceres Chemical, a chemicals broker, to find potential clathrate manufacturers. 1. Invamed’s Negotiations with Pharmeco In the summer of 1996, Ceres put In-vamed in touch with Pharmeco, a Boston area chemical manufacturer, about manufacturing clathrate for Invamed using Ka-sireddy’s process. In September 1996, In-vamed entered into a Non-Disclosure Agreement with Ceres and Pharmeco concerning their warfarin sodium discussions. Pharmeco, however, ultimately declined to enter into an agreement to manufacture clathrate for Invamed based on environmental and safety issues relating to the product. 2. Invamed’s Negotiations with Chemagis Ceres also brought Chemagis, an Israel-based manufacturer of raw materials, to Invamed’s attention. In the fall of 1996, Patel and Yashvant Patel met with Chem-agis to discuss the possibility of Chemag-is’s manufacturing clathrate for Invamed and entered into a Non-Disclosure Agreement with Ceres and Chemagis regarding their warfarin sodium discussions. Patel provided Chemagis with a flowchart of the process involved. In or around November 1996, Chemagis offered to enter into an agreement with Invamed for the supply of clathrate. Chemagis offered to manufacture clathrate for Invamed if Invamed would pay for certain costs associated with setting up a separate manufacturing facility, which Chemagis estimated would take approximately eight months, and bear some of the expenses involved in obtaining a DMF approval. Invamed rejected this proposal because it did not want to pay for the upfront costs and because it was concerned that Chemagis’s time-frame to set up the manufacturing process was too long. In-vamed had no further communication with Chemagis regarding warfarin sodium. D. Banyan Begins Manufacturing Clathrate In March 1997, Kasireddy went to India to train Banyan personnel in the process he had developed for synthesizing clath-rate. By the end of May 1997, Kasireddy had produced acceptable pilot-plant scale batches in the Banyan facility. On September 24, 1997, when Invamed knew its ANDA approval was imminent, Invamed ordered 29.5 kilograms of clath-rate from Banyan at $4,000 per kg. In-vamed planned to supplement its ANDA with Banyan’s clathrate. The next day, the idea to present a “hardship case” to the FDA for expedited approval was raised in a meeting with Apothecon. The FDA inspected Banyan’s plant in connection with the manufacture of clath-rate in September 1998. E. Invamed Enters A Supply Agreement With Shanghai Shenxing In July or August 1996, Invamed had requested that ChemWerth, a pharmaceutical manufacturers’ representative and consultant, develop an FDA-approved source of clathrate for Invamed. Chem-Werth advised Invamed that a Chinese manufacturer known as Shanghai Shenx-ing (also known as Shanghai # 16) (“Shanghai”) was capable of producing clathrate that complied with USP, and offered Invamed an exclusive supply arrangement. On December 5, 1996, Chem-Werth received its first sample of USP elathrate from Shanghai. On April 8,1997, Invamed received from ChemWerth samples of Shanghai clath-rate, that were tested and found to be of very good quality. ChemWerth also sent a written proposal to Invamed for a three-year supply of clathrate from Shanghai. ChemWerth sent a letter to Invamed confirming Invamed’s verbal commitment to use Shanghai as a source for clathrate on May 1, 1997. However, later in 1997, Patel told ChemWerth to put its development of the Shanghai source “on hold” when Banyan began producing clathrate. VIL Invamed’s ANDA Is Approved And It Submits A Purchase Order To Brantford For 750 kg Of Clathrate A. Invamed Submits a Purchase Order To Brantford On September 30, 1997, Invamed received approval from the FDA for its war-farin sodium ANDA. The next day, October 1, 1997, Invamed submitted a $1,875,000 purchase order to ACIC Fine Chemicals for 750 kilograms of clathrate in three shipments of 250 kilograms each, at a price of $2,500 per kilogram. The purchase order requested that the first shipment be delivered “as soon as possible (rush order)” and that the second and third shipments be delivered on January 1, 1998 and April 1,1998, respectively. Invamed’s purchase order was accompanied by a cover letter to Getrajdman in which Invamed informed Getrajdman that it had received FDA approval to manufacture and distribute warfarin sodium tablets. The letter requested that ACIC Fine Chemicals, Inc. supply Invamed with clath-rate pursuant to the purchase order enclosed and made reference to an “agreement” for the supply of clathrate. No one at Invamed advised Getrajdma