Abbott has notified Kolon Pharma that it would cancel the joint sales of five products that Kolon Pharm had been marketing for more than three years, industry insiders said on Tuesday,

The five products are Klaricid film-coated tablet, Klaricid-XL tablet, Klaricid dry syrup, Hidrasec powder, and Hokunalin patch.

The two companies signed the co-promotion contract, which refers to joint business by introducing drugs from other pharmaceutical companies, for the five items in 2018. Most agreements provide the co-promoting company 20 to 30 percent of the total sales as a commission.

Industry watchers have speculated Abbott Korea decided to terminate the contract because the co-promotion sales fell drastically because pediatricians who prescribe most of the five items were hit hard by the Covid-19’s fallout. Kolon Pharm is well known for its strong sales network in the pediatrics field.

According to IQVIA, a pharmaceutical market research company, the five items’ estimated sales were 13.7 billion won ($12.2 million) in 2017. After Kolon Pharm started co-promoting the items, the sales amount grew to 14.8 billion won in 2018 and 17.1 billion won in 2019. However, due to the Covid-19 outbreak sales, their turnover fell sharply to 8.6 billion won in 2020.

A decrease in commission sales seems unavoidable for Kolon Pharma, the sources predicted.

Product sales from the co-promotion agreement grew from 21.6 billion won in 2017 to 31 billion won in 2018, and 41.3 billion won in 2019 but decreased to 38.4 billion won in 2020.

Kolon Pharma’s sales, which reached 108.1 billion won in 2019, also dropped 7 percent to 94.3 billion won last year.