EU approves acquisition of Allergan Generics by Teva with conditionsStaff writer ▼ | March 10, 2016
The European Commission has approved under the EU Merger Regulation the proposed acquisition of the generics business of Allergan of Ireland, by Teva of Israel, subject to conditions.
Acquisition The European Commission decided on Allergan and Teva
The decision is conditional upon the divestment of a number of assets, including the great majority of Allergan Generics' business in the UK and Ireland.
The Commission had concerns that the merged entity would have faced insufficient competition from the remaining players for a number of generic pharmaceuticals, as well as regarding the overall generics business in the UK, Ireland and Iceland. The commitments offered by the companies address these concerns.
Commissioner Margrethe Vestager, in charge of competition policy, commented: "Effective competition between generic pharmaceutical manufacturers is essential to drive down prices for patients and healthcare systems.
"I am glad we have found a solution that allows this takeover to proceed, while ensuring that competition will continue in all European countries."
Following a thorough market investigation, the Commission indeed found that competition concerns arose for a number of marketed generic molecules and generic molecules in development pipeline in 24 EEA countries, due to horizontal overlaps or vertical relationships (related to out-licensing) between the parties. On the other hand, the Commission did not identify any competition concerns as regards vertical relationships resulting from the parties' offerings of active pharmaceutical ingredients.
The Commission also found that in Iceland, Ireland and the United Kingdom, where the merging parties are the two largest generics suppliers, the remaining players would have been unable to compete effectively with the merged entity due to the prevalent distribution models and the structure of the national generics market.
In Iceland, Allergan Generics has historically been the dominant generics supplier, a position that was being challenged by Teva's offering, sold by its wholesaler Lyfis.
In Ireland, Teva and Allergan Generics are recent entrants that shortly afterwards became market leaders, successfully challenging the established generics players, in particular through aggressive pricing in the United Kingdom, Teva and Allergan Generics are the only two generics manufacturers with a portfolio of generics broad enough to be able to sell directly to pharmacies, offering competitive discount schemes and a level of service valued by customers.
The Commission concluded that the elimination of one of the merging parties would harm competition for the sale of generics in these countries, wit
h a risk of price increases and loss of quality of service and supply. In order to address the Commission's competition concerns, the two companies offered a comprehensive remedies package including the divestment of:
- each of the marketed molecules and molecules in development pipeline giving rise to competition concerns in 24 EEA countries
- Teva's portfolio of marketed molecules and molecules in development pipeline in Iceland
- the great majority of Allergan Generics marketed generics activities and generics activities in development pipeline in Ireland and the United Kingdom, covering all the main steps in the manufacture, supply and distribution of these products (including Allergan Generics' manufacturing plant in Barnstaple, UK, where most of the generics it sells in Ireland and the UK are manufactured). ■