Two recent transactions in the pharmaceutical space were scrutinized by various international competition agencies. Ultimately, both transactions were cleared in all jurisdictions, but in both instances, divestitures were required.
On 4 January 2010, Novartis announced that it would acquire a controlling interest, an additional 52 percent, of the outstanding shares of Alcon for approximately $28.1 billion. Prior to the acquisition, Alcon's majority owner was Nestle S.A.; Novartis previously had held 25 percent of Alcon's shares. Given the size and scope of the acquisition, in addition to the FTC, several international competition agencies took an interest in the transaction, including the European Commission and agencies in China, Australia, and Canada.
The FTC issued a complaint on 16 August 2010 alleging that the acquisition would lead to a monopoly in the research, development, manufacture, and sale of injectable miotics in the United States. Injectable miotics are used during cataract surgery to reduce the size of the pupil to determine whether a rupture has occurred. The parties entered into a consent agreement with the FTC under which Novartis agreed to sell its injectable miotics product, Miochotol-E, to Bausch & Lomb. Novartis will retain the Alcon miotics product, Miostat. As part of the divestiture agreement, Novartis must transfer assets, third-party manufacturing arrangements, and technical assistance associated with the manufacture of Miochotol-E to Bausch & Lomb in order to ensure its competitiveness going forward.
The EC took issue with the combination with respect to a number of products: ophthalmological anti-infectives, anti-inflammatory/anti-infective combinations, anti-allergics, decongestants, antiseptics, mydriatics and cycloplegics, diagnostic agents, non-steroidal anti-inflammatories, injectable miotics, anti-glaucoma products, artificial tears, and multipurpose solutions for contact lenses, and required a divestiture in certain member states with respect to the related products. Canada also required divestitures in injectable miotics, multi-purpose contact lens solution, and an ophthalmic anti-allergy agent. Australia require divestiture only with respect to Novartis' injectable miotics product. See "MOFCOM Clears Second Life Sciences Merger Subject to Conditions" for more detail on China's review of this transaction and its disparate approach to the remedy for this transaction compared to its international counterparts.
In another international pharmaceutical merger, Teva won the bidding for Merckle Group's Ratiopharm, the world's fourth-largest generic drug maker, headquartered in Germany. Teva agreed to pay nearly $5 billion for Ratiopharm in a purchase agreement signed in March of this year. Although the proposed transaction did not raise antirust issues in the United States, the transaction was scrutinized by various competition agencies, including the Canadian Competition Bureau and the European Commission (EC). The Competition Bureau required divestiture of certain Teva or Ratiopharm pain relievers — acetaminophen oxycodone tablets and morphine sulfate sustained-release tablets, while the EC required more significant divestitures. The EC found that the two companies had very high market shares in a number of products in the Netherlands that are used to treat anemia, hypertension, asthma, gout, inflammation, and pain. In addition, the EC found the combination would result in very high market shares in Hungary with respect to tramadol, a pain reliever. In order to satisfy the EC's concerns, Teva agreed to divest various Ratiopharm products in the Netherlands and Hungary, along with Ratiopharm's distribution system in the Netherlands.
The review of Novartis/Alcon and Teva/Ratiopharm by various competition agencies demonstrates the continued diligence and expansion of merger clearance processes throughout the world, as well increased cooperation between international competition authorities.