In wake of biopharma mega buyouts, FTC kicks off review of industry's dealmaking

18 March 2021

Eric Sagonowsky / FirecePharma

Bristol Myers Squibb and Celgene. AbbVie and Allergan. Pfizer's Upjohn unit and generics giant Mylan. 

These are three of the biggest pharma mergers of the past couple years. They're also the kind of deals the Biden administration's Federal Trade Commission (FTC) might have scrutinized more closely, an agency official said Tuesday in announcing a sweeping review of its approach to biopharma M&A.

The process could bring tougher enforcement for biopharma's deal-makers going forward—and come into play for ongoing reviews, including the pending examination of AstraZeneca's $39 billion takeover of Alexion. 

Citing a high number of mergers in the industry in recent years—plus “skyrocketing” drug costs and allegations of anticompetitive conduct in the industry—FTC acting Chair Rebecca Kelly Slaughter told reporters Tuesday it’s “imperative that we rethink our approach.” The agency plans an "aggressive" approach toward anti-competitive deals, she added.

The FTC will work with the Department of Justice, state attorneys general and competition authorities in other countries to examine how mergers from recent years have played out after the deals closed. 

The FTC staff has an “eagerness and enthusiasm to be responsive” to the concerns, Slaughter said, and is ready to “put ideas into practice." The acting chair said she’s “happy to have work move as fast as it can.” 

In a new Securities and Exchange Commission filing, Alexion said it would withdraw a merger application and refile to give the agency more time to review. AstraZeneca planned to refile as well, Alexion said.

In an issue specific to the pharma industry, Slaughter said new technologies often emerge from small companies. The FTC wants to ensure that it’s “not just thinking about traditional questions,” such as market share, in merger reviews to ensure new drugs can reach the market at affordable prices, Slaughter said.

Pharma "impacts real people in a real way," she said, adding high drug prices are a "policy area of concern" for everybody.

There have been hundreds of biopharma takeovers in the last decade, Slaughter told reporters, and $1.6 trillion has changed hands under those deals. 

Still, at least one team of analysts doesn't see major risks for the industry from the review.

"We do not think the initiative is a cause for concern, but headlines from the FTC working group could dampen enthusiasm for M&A deals if the scrutiny increases ... or the working group looks retrospectively at prior deals that have been completed," Cantor Fitzgerald analyst Louise Chen wrote to clients Tuesday.

Aside from the recent mega buyouts Slaughter mentioned, other deals to attract FTC scrutiny in recent years include Roche’s buyout of Spark Therapeutics, which cleared the agency after delays, and Sandoz’s move to sell certain meds to Aurobindo. Sandoz and Aurobindo eventually abandoned their deal due to FTC concerns. 

Source

Print

Shareholders

Read more

Pipeline

Read more

Media Center

Read more