SAINT LOUIS, Aug. 3 /PRNewswire-FirstCall/ -- Monsanto Company announced today that it has filed an arbitration claim against Sandoz, a subsidiary of the pharmaceutical company Novartis AG, in an international arbitration proceeding. Monsanto seeks to recover damages caused by Sandoz's inadequate quality assurance program and the U.S. Food and Drug Administration (FDA) issuance of a Warning Letter to Sandoz's pharmaceutical facility in Kundl, Austria, which contracted to supply Monsanto's dairy product, POSILAC bovine somatotropin. All products sold by Monsanto met quality control standards, but the process of making necessary changes and improvements to the facility limited manufacturing capabilities.

Supplies to Monsanto and its customers were disrupted as a result of Sandoz's failure to meet quality assurance obligations that were warranted and represented by Sandoz as satisfying compliance with FDA's current Good Manufacturing Practices standards.

In November 2003, the FDA inspected the Sandoz manufacturing facility in Kundl, Austria, and found problems with the facility and systems that led to the issuance of an FDA Warning Letter. The process of making necessary changes and corrections addressed quality assurance, but required shut-downs and limited manufacturing capabilities at the Sandoz plant. FDA conducted a follow-up regulatory inspection in 2006 and lifted its Warning Letter in August 2006.

"Sandoz's failure to maintain the quality practices expected by FDA was a clear breach of its contractual obligations ," said David Snively, senior vice president and general counsel for Monsanto. "Since discussions with Sandoz to resolve this issue were inconclusive, we have filed for arbitration with the International Chamber of Commerce, according to the provisions of the contract, seeking in excess of $100 million in damages. Arbitration will determine how much compensation is owed by Sandoz to Monsanto."

The arbitration complaint notes that as a direct result of Sandoz's quality assurance failures, it did not fulfill its contractual supply agreements and Monsanto suffered extensive financial loss.

Since Monsanto's dairy industry product was first sold in the U.S. in 1994, POSILAC has become the leading dairy animal pharmaceutical supplement in the United States. Supplementing dairy cows with POSILAC safely enhances milk production and serves as an important tool to help dairy producers of all sizes improve the efficiency of their operations. Cows supplemented with POSILAC produce an average of 10 lb. more milk per day.

Monsanto Company is a leading provider of technology-based solutions and agricultural products that improve farm productivity and food quality. For more information on Monsanto, see http://www.monsanto.com/.

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Certain statements contained in this release are "forward-looking statements," such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of biotechnology products; the success of the company's research and development activities; the outcomes of major lawsuits, including proceedings related to Solutia Inc.; developments related to foreign currencies and economies; successful completion and operation of recent and proposed acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the company's ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and other risks and factors detailed in the company's filings with the SEC. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results.

SOURCE: Monsanto Company

CONTACT: Andrew Burchet, +1-314-694-4452, for Monsanto Company

Web site: http://www.monsanto.com/

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