Aug. 3, 2007 (Bloomberg) -- Monsanto Co., the producer of a synthetic bovine hormone called Posilac, said it is trying to collect more than $100 million in damages from Novartis AG's Sandoz unit, which was contracted to manufacture the product.

The Sandoz pharmaceutical plant in Kundl, Austria, failed to meet quality standards for Posilac, disrupting supplies and prompting a November 2003 warning letter from the U.S. Food and Drug Administration, St. Louis-based Monsanto said today in a statement. The FDA lifted its warning in August 2006.

Damages are being sought in an arbitration claim filed today with the International Chamber of Commerce, Monsanto said. The claim includes lost production and other expenses associated with the disruption, spokesman Andrew Burchet said. Posilac is used to boost milk production in about one-third of U.S. dairy herds.

``Sandoz's failure to maintain the quality practices expected by FDA was a clear breach of its contractual obligations,'' David Snively, Monsanto's general counsel, said in the statement. ``Discussions with Sandoz to resolve this issue were inconclusive.''

Shares of Monsanto fell 90 cents, or 1.4 percent, to $64.08 at 4:26 p.m. in New York Stock Exchange composite trading. They have gained 41 percent in the past year.

Monsanto wasn't able to meet Posilac demand until March 2006, when production began at a company plant in Augusta, Georgia, Burchet said. Posilac was approved by the FDA in 1993 and is known as recombinant bovine growth hormone, or rBGH, and recombinant bovine somatotropin, or rBST. Treating a cow with Posilac increases milk production by an average of 10 pounds a day, Monsanto said.

Sandoz spokesman Charles A. Bruns wasn't available, and a public-relations agency for the company declined to comment.

To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net .

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