NIT 2018 IN
Certain Nitisinone Capsules
Statement of Reasons

[11] Founded in 1997, Laboratoires KABS Inc. is a company that specializes in drug development and contract manufacturing. The head office and production facilities of Laboratoires KABS Inc. are located in Longueuil, Quebec. MendeliKABS Inc. is an affiliated company that is the promoter of NIT produced by Laboratoires KABS Inc. and has been granted market authorization and accreditation by Health Canada. The complainant is the only producer of NIT in Canada.

[12] The contact information of the complainant is as follows:

Laboratoires KABS Inc.
4500, rue de Tonnancour
Saint-Hubert, Quebec
J3Y 9G2

MendeliKABS Inc.
4601, rue de Tonnancour
Saint-Hubert, Quebec
J3Y 9J3

[13] The complainant has indicated that there are no trade unions that represent persons employed in the production of NIT in Canada.

[14] At the initiation of the investigation, the CBSA identified 5 potential importers of the subject goods from CBSA import documentation and from information submitted in the complaint. All of the potential importers were sent the CBSA’s Importer Request for Information (RFI) in respect of imports of NIT from Sweden.

[15] One company, Sobi Canada Inc. (Sobi Canada) provided a response to the Importer RFI.^{Footnote 1} The CBSA sent the company two supplemental RFIs (SRFIs) to clarify information provided in the response and request additional information. The response to these SRFIs were received and the CBSA is reviewing these responses and additional information may be requested during the final phase of the investigation.^{Footnote 2}

[16] The other four parties that were contacted indicated that they did not import subject goods during the POI. Two of the four parties performed certain roles and responsibilities within Sobi Canada’s sales process relating to the quality control and distribution of the goods. The other two parties, the Sainte-Justine Hospital and SigmaSanté, are the unrelated purchaser of the subject goods and the entity responsible for the tender process for the supply of NIT in Québec.^{Footnote 3}

[17] Sobi Canada is considered to be the importer of subject goods for SIMA purposes.

[18] At the initiation of the investigation, the CBSA identified one exporter and a contract manufacturer of the subject goods from information provided by the complainant and CBSA import entry documentation. Both of these companies were sent the CBSA’s Dumping RFI.

[19] One company, Swedish Orphan Biovitrum AB (Sobi AB) provided a response to the CBSA’s Dumping RFI.^{Footnote 4} Sobi Canada Inc. is an affiliate of Sobi AB. In its response, Sobi AB indicated that it considers itself to be the importer, the exporter and the manufacturer of the subject goods. The other contacted party, Apotek Produktion & Laboratorier, responded that they are neither the exporter nor the producer of the subject goods.

[20] Sobi AB provided a substantially complete response to the CBSA’s Dumping RFI. The CBSA sent the company a supplemental RFI (SRFI) to clarify information provided in the response and request additional information. The response to the SRFI was received and the CBSA is reviewing this response and additional information may be requested during the final phase of the investigation.^{Footnote 5} Sobi AB is considered to be the exporter of subject goods for SIMA purposes. The submission and results have been summarized in the Preliminary Results of the Dumping Investigation section, found below.

[21] For the purpose of this investigation, subject goods are defined as:

[22] The goods in question are commonly called nitisinone capsules (NIT). The chemical name and the active molecule of nitisinone is 2 (2 Nitro 4 Trifluoromethylbenzoyl) 1, 3 Cyclohexanedione (“NTBC”) and its molecular formula is C₁₄H₁₀F₃NO₅.

[23] Nitisinone is a drug approved for the treatment of hepatorenal tyrosinemia type 1 (HT-1). HT-1 is a rare metabolic disease affecting approximately 1,000 people worldwide. Prevalence of this disease is particularly high in Quebec, where approximately 100 people receive NIT as treatment for HT-1.

[24] NIT is an orally administered drug. The capsules contain a powder of nitisinone and a pharmacologically inert substance. These drugs are sold in hospital and community pharmacies by prescription.

[25] The product definition includes nitisinone that is packaged for retail consumption at the time it is imported, that is, packaged in plastic or glass containers with an exact unit count of the capsules. In general, these containers contain sixty (60) capsule units with the same dosage. Blister pack-type containers are also included, as well as containers containing more or less than 60 capsules.

[26] The product definition also includes nitisinone that is not packaged for retail consumption at the time it was imported, that is, in bulk containers intended for bottling or packaging in Canada.

[27] The product definition does not include nitisinone in liquid suspension.

[28] The NIT production process can be subdivided into two elements; the production of the medicinal ingredient nitisinone and the assembly of the ingredients into a capsule.

[29] First, the chemical compound nitisinone is synthesized under controlled laboratory conditions. It is then combined with an inert substance and encapsulated in the desired proportions. The non-medicinal ingredients used by the complainant include corn starch, titanium dioxide, gelatin, shellac and iron oxide. The non-medicinal ingredients used by the manufacturer of the subject goods differ slightly, however, this does not affect the substitutability of the products. The assembled capsules are then bottled in plastic containers, each containing 60 units of the specified dosage.

[30] The allegedly dumped goods are normally classified under the following tariff classification numbers (tariff numbers):

• 3003.90.00.90
• 3004.90.00.79
• 3004.90.00.90

[31] The listing of tariff numbers is for convenience of reference only. The tariff numbers include non-subject goods. Also, subject goods may fall under tariff numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

[46] Normal values are generally estimated based on the domestic selling prices of like goods in the country of export, in accordance with the methodology of section 15 of SIMA, or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with the methodology of paragraph 19(b) of SIMA.

[47] The export price of goods sold to importers in Canada is generally estimated in accordance with the methodology of section 24 of SIMA based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.

[48] Where there are sales between associated persons and/or a compensatory arrangement exists, the export price is estimated based on the importer’s resale price of the imported goods in Canada to unrelated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada that are additional to those incurred on the sales of like goods for use in the country of export, all costs included in the resale price that are incurred in reselling the goods (including duties and taxes) or associated with the assembly of the goods in Canada and an amount representative of the average industry profit in Canada as provided for in paragraphs 25(1)(c) and 25(1)(d) of SIMA.

[49] The estimated margin of dumping by exporter is equal to the amount by which the total estimated normal value exceeds the total estimated export price of the goods, expressed as a percentage of the total estimated export price. All subject goods released into Canada during the POI are included in the estimation of the margin of dumping of the goods. Where the total estimated normal value of the goods does not exceed the total estimated export price of the goods, the margin of dumping is zero.

[51] Sobi AB is a Swedish public limited liability company listed on Nasdaq Stockholm. It is an integrated biotechnology company with in-house capabilities that encompass the entire value chain, from research, to preclinical and clinical development, biologics manufacturing and supply, to patient access and distribution.

[52] Sobi AB provided a substantially complete response to the CBSA’s Dumping RFI, including a database of domestic sales of NIT during the PAP. Where there were sufficient sales of goods that were identical or similar to the subject goods exported to Canada, normal values were estimated based on the methodology of section 15 of SIMA, using domestic sales of like goods.

[53] In instances where there were an insufficient number of domestic sales of goods that were identical or similar to the subject goods exported to Canada, normal values were estimated based on the methodology of paragraph 19(b) of SIMA, as the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits.

[54] The cost of production was estimated in accordance with paragraph 11(1)(a) of the Special Import Measures Regulations (SIMR), based on Sobi AB’s unverified cost data associated with the subject goods shipped to Canada. The amount for administrative, selling and all other cost was estimated in accordance with subparagraph 11(1)(c)(i) of the SIMR. The amount for profits was estimated in accordance with subparagraph 11(1)(b)(i) of the SIMR, based on Sobi AB’s sales of like goods in their domestic market, during the PAP.

[55] For subject goods exported to Canada during the POI, although both the exporter and its related importer provided complete, timely and accurate information, the CBSA was unable to estimate the exporter’s sale price or the importer’s purchase price for the goods in accordance with the methodology of section 24 of SIMA.

[56] Where the exporter and the importer are related, as is the case here, the CBSA generally performs a reliability test to determine whether the section 24 export prices are reliable as envisaged by SIMA. As export prices could not be estimated using the methodology of section 24 of SIMA, the CBSA was unable to test the reliability of export prices for the preliminary phase of the investigation under paragraph 25(1)(b) of SIMA. As a result, export prices were estimated using the methodology of paragraph 25(1)(c) of SIMA, based on the importer’s selling prices to an unrelated party, adjusted by deducting the costs incurred on or after the importation of the goods and on or before their sale by the importer, an amount for profit by the importer, the costs charges and expenses incurred in preparing the goods for shipment to Canada that are additional to those generally incurred on sales of like goods for use in the country of export, and the costs, charges and expenses incurred resulting from the exportation and shipment of the goods. The amount for profit was estimated pursuant to paragraph 22(c) of the SIMR based on the only profit data that was available to the CBSA. The amount for profit was estimated to be 17.85% based on a report produced by Industry Canada which represents profit from pharmaceutical and pharmacy supplies merchant wholesalers during the year 2016.^{Footnote 12}

[57] For the preliminary determination, the total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 1,461% for Sobi AB, expressed as a percentage of the export price. The CBSA will continue to collect and verify information from Sobi AB and Sobi Canada during the final phase of the investigation.

[58] A summary of the preliminary results of the dumping investigation respecting all subject goods released into Canada during the POI are as follows:

[59] Under section 35 of SIMA, if at any time before making a preliminary determination the CBSA is satisfied that the actual and potential volume of goods of a country is negligible, the CBSA is required to terminate the investigation with respect to goods of that country.

[60] Pursuant to subsection 2(1) of SIMA, the volume of goods of a country is considered negligible if it accounts for less than 3% of the total volume of goods that are released into Canada from all countries that are of the same description as the goods.

[61] The volumes of subject goods from Sweden is 100% of the total volume of goods released into Canada. Based on the definition above, the volume of subject goods from Sweden is therefore not negligible.

[62] If, in making a preliminary determination, the CBSA determines that the margin of dumping of the goods of a particular exporter is insignificant pursuant to section 38 of SIMA, the investigation will continue in respect of those goods but provisional duties will not be imposed on goods of the same description imported during the provisional period.

[63] Pursuant to subsection 2(1) of SIMA, a margin of dumping of less than 2% of the export price of the goods is defined as insignificant. The margin of dumping estimated for Sobi AB is greater than the threshold of 2% and is therefore not considered insignificant.

[64] A summary of the estimated margin of dumping and provisional duty for Sobi AB is presented in Appendix 1.

[70] The CBSA will continue its investigation and will make a final decision by March 20, 2019.

[71] If the margin of dumping is found to be insignificant, the CBSA will terminate the investigation in respect of those goods and any provisional duty paid or security posted will be refunded to importers, as appropriate. If the CBSA is satisfied that the goods were dumped, a final determination will be made.

[72] The CITT has begun its inquiry into the question of injury to the Canadian industry. The CITT is expected to issue its finding by April 19, 2019.

[73] If the CITT finds that the dumping has not caused injury, retardation or is not threatening to cause injury, the proceedings will be terminated and all provisional anti-dumping duty collected or security posted will be refunded.

[74] If the CITT makes a finding that the dumping has caused injury, retardation or is threatening to cause injury, anti-dumping duty in an amount equal to the margin of dumping will be levied, collected and paid on imports of NIT that are of the same description as goods described in the CITT’s finding.

[75] For purposes of the preliminary determination of dumping, the CBSA has responsibility for determining whether the actual and potential volume of goods is negligible. After a preliminary determination of dumping, the CITT assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the CITT is required to terminate its inquiry in respect of any goods if the CITT determines that the volume of dumped goods from a country is negligible.