In October 2011, the FTC required Healthcare Technology Holdings, Inc. to divest SDI Health’s promotional audit and medical audit business lines in order for Health Technology’s subsidiary, IMS Health to consummate its acquisition of SDI.
IMS produces and sells healthcare data and analytics to pharmaceutical and biotechnology companies. SDI provides similar healthcare analytics. The FTC alleged that IMS and SDI compete to provide both promotional and medical audits. Promotional audits are market research products that assist branded drug manufacturers in determining how much to spend on marketing and advertising for drugs. Medical audits assess the medical diagnoses made and products prescribed for treatment of specific diseases in order to help physicians understand prescription and treatment trends.
The FTC complaint alleged that each of these markets is highly concentrated, and the merging firms together hold 98 percent and 100 percent of the audits and promotions markets respectively. Furthermore, the FTC claimed that new entry into these markets is unlikely because of the time and expense required to enter compared to the relatively small opportunity for sales associated with these lines of business. In fact, the complaint claims the total estimated markets for promotional and medical audits are only US$16 million and US$9 million respectively.
The Divestiture Order allowed the parties to close the transaction but required them to divest the businesses at issue to an FTC-approved buyer within 90 days of closing. In late January, the parties proposed to divest to inVentive Health, Inc., an existing healthcare services company with experience in promotional audits for specific therapy categories. The Commission approved inVentive as a buyer on 15 March.