Haihong suspends government bidding for Biosite's Triage products in China

On April 1, 2010, Haihong Medical Device Bidding Co., the largest government purchase bidding company for medical devices in China, suspended all government bidding for Biosite's Triage products pending the resolution of the lawsuit between Chinmax Medical Systems, Inc. and Inverness Medical Beijing Co. Ltd. (IMB), a subsidiary of Inverness Medical Innovations, Inc. ( IMA).

Public hospitals in many regions of China can only purchase Triage products through the on-line bidding system operated by Haihong, and the Haihong system was one of the most important distribution channels for Triage products in China. Chinmax had been properly listed as the proper maintenance company for Triage products on the Haihong system for the past 8 years.

On March 15, 2010, David Teitel, CFO of Inverness Medical Innovations, Inc., wrote a letter to Haihong, purporting to "cancel Chinmax Medical Systems, Inc. as the maintenance company for data submission with Haihong Company" and "to entrust Inverness Medical Beijing Co., Ltd as the exclusive maintenance company for data submission with Haihong Company." On March 30, Haihong informed Chinmax of the letter from David Teitel.

In response, Chinmax took decisive actions immediately. On March 31, Chinmax management held a meeting with representatives of Haihong, and counsel for Chinmax sent an official letter to Haihong requesting that Haihong not change the status quo before the court adjudicates the dispute between Chinmax and IMB. On April 1, 2010, Haihong decided to deny Inverness's improper request, and to suspend all government bidding for Biosite's Triage products pending the resolution of the lawsuit between Chinmax and IMB, until court's final judgement.