Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Eli Lilly to divest product line to settle FTC action on Novartis Animal Health deal, (Dec 22, 2014)

By Greg Hammond, J.D.

Global pharmaceutical company Eli Lilly and Co. has agreed to divest its Sentinel product line of heartworm treating medications for dogs in order to settle FTC charges that its proposed $5.4 billion acquisition of Novartis Animal Health would likely be anticompetitive (In the Matter of Eli Lilly and Co., FTC No. 141 0142).

Eli Lilly and Novartis both develop and market a number of animal health products, including medications that treat diseases and conditions afflicting livestock and pets. The companies allegedly sell the only two oral heartworm parasiticides for dogs that contain the same active ingredient and also treat fleas and other internal parasites.

In its complaint against Eli Lilly and Novartis, the Commission alleged that the proposed acquisition could substantially lessen competition and could create a monopoly. Specifically, it alleged that the acquisition would: (1) eliminate actual, direct, and substantial competition between Eli Lilly and Novartis; (2) increase the likelihood that Eli Lilly would unilaterally exercise market power in the relevant market; and (3) increase the likelihood that consumers would be forced to pay higher prices for the relevant product.

In addition, entry into the relevant market would be unlikely, the FTC asserted, because the required investment would be difficult, and the drug development times and FDA approval requirements would be lengthy. The proposed acquisition would therefore violate Section 5 of the FTC Act and Section 7 of the Clayton Act, the FTC claimed.

Pursuant to the consent agreement and decision and order, Eli Lilly has agreed to divest the Sentinel product line to French pharmaceutical company, Virbac S.A.

Companies: Eli Lilly and Co.; Novartis AG; Virbac S.A.

News: AcquisitionsMergers Antitrust FederalTradeCommissionNews