The Federal Trade Commission (FTC) on Wednesday announced that generic drugmaker Teva Pharmaceuticals has agreed to sell its rights and assets to 79 pharmaceuticals to settle FTC charges that its proposed $40.5 billion acquisition of Allergan’s generic pharmaceutical business would be anticompetitive.
Teva is currently the largest generic drug company in the US, with an overall market share of about 13%, while Allergan is ranked third, accounting for about 9% of generic sales. Five of the largest geneeric suppliers account for about half of all generic sales, FTC says.
Teva’s divested products include anesthetics, antibiotics, weight loss drugs, oral contraceptives and treatments for ADHD, allergies, arthritis, cancer, diabetes, high blood pressure, high cholesterol, mental illness, opioid dependence, pain, Parkinson’s disease, and respiratory, skin and sleep disorders.
As explained in its statement, the FTC also evaluated whether the acquisition would have anticompetitive effects beyond the individual products but ultimately concluded that the evidence showed it was unlikely. Specifically, the commission considered whether the transaction would lower incentives to develop or bring new generic drugs to market, as well as whether the combined company’s ability to bundle products could have an anticompetitive effect.
The companies acquiring the divested products include Impax Laboratories, Dr. Reddy’s Laboratories, Sagent Pharmaceuticals, Cipla Limited, Zydus Worldwide, Perrigo Pharma International, Aurobindo Pharma USA and 3M Company.
Teva and Allergan must divest the drugs no later than 10 days after the acquisition is complete, FTC says, and to help ensure that the order achieves its goals, the companies are required to provide technical assistance and other transitional services to ensure that the acquirers can independently manufacture and sell the divested products.
In addition to the divestitures, FTC ordered Teva to offer 15 existing active pharmaceutical ingredient (API) customers the option of entering into long-term API supply contracts. This option ensures that these customers have access to essential APIs and provides them with enough time to qualify alternative suppliers if necessary, as explained in an analysis to aid public comment.
“Teva is [the] world’s largest API supplier and supplies API to Allergan’s competitors in a number of generic markets,” FTC explains. “The proposed acquisition may lessen current or future competition in fifteen pharmaceutical products markets by creating the incentive and ability for Teva to foreclose rival suppliers of fifteen newly acquired Allergan pharmaceutical products by withholding supply” of eight Teva APIs.
The FTC voted unanimously, 3-0, to issue the complaint and accept the proposed consent order for public comment. The agreement will be subject to public comment for 30 days, beginning 27 July and continuing through 29 August 2016, after which the Commission will decide whether to make the proposed consent order final.
Consent Order Agreement