The Federal Trade Commission (FTC) required the sale of five generic drugs to resolve its challenge of Mylan Laboratories’ (Mylan) proposed $6.6 billion acquisition of the generic business of Merck KGaA (Merck). A consent order required Mylan and Merck to divest all assets related to the five drugs to Amneal Pharmaceuticals LLC (Amneal) within 10 days of completing the deal.
In a deal announced in May 2007, Mylan agreed to acquire Merck’s generic subsidiary, in a transaction valued at approximately $6.6 billion. The FTC focused its investigation on the U.S. markets for five generic drugs: 1) acebutolol hydrochloride capsules; 2) flecainide acetate tablets; 3) guanfacine hydrochloride tablets; 4) nicardipine hydrochloride capsules; and 5) sotalol hydrochloride AF tablets. The FTC contended that in the market for generic acebutolol capsules, Mylan and Merck are the only companies manufacturing and selling products in the United States. For the four other generic products, the FTC contended that Mylan and Merck currently are two of a small number of suppliers offering the product. The FTC alleged that the transaction would have given markets shares in excess of 70% in each of these products.
The proposed buyer of the five products, Amneal, is a small generic manufacturer that develops, manufacturers, sells, and distributes generic pharmaceuticals within the United States and currently does not compete in any of the markets where product must be divested. The FTC stated that with its resources, capabilities, good reputation, and experience marketing generic products, Amneal is well-positioned to replicate the competition that would be lost with the proposed acquisition. This action demonstrates the FTC’s continuing focus on mergers impacting generic drugs. The FTC’s supporting papers reaffirmed its view that fewer competitors in generics generally leads to higher prices.