Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Sun Pharmaceuticals settles FTC charges over Ranbaxy acquisition, (Feb 2, 2015)

By Linda O’Brien, J.D., LL.M.

Pharmaceutical manufacturers Sun Pharmaceutical Industries Ltd. and Ranbaxy Laboratories Ltd. have agreed to divest Ranbaxy’s interests in generic minocycline tablets in order to settle FTC charges that Sun’s $4 billion proposed acquisition of Ranbaxy would likely be anticompetitive, the agency announced on January 30. Torrent Pharmaceuticals Ltd., a global drug company based in India that markets generic drugs in the United States, will acquire the divested assets (In the Matter of Sun Pharmaceutical Industries Ltd., File No. 141-0134).

Generic minocycline tablets are used to treat a wide array of bacterial infections, including pneumonia, acne, and urinary tract infections. In April 2014, Sun and Ranbaxy entered into an agreement under which Sun would acquire all of Ranbaxy’s stock, valued at approximately $4 billion. According to the FTC’s complaint, the proposed merger would likely harm competition by reducing the number of suppliers in the U.S. markets for three dosage strengths (50 mg, 75 mg, and 100 mg) of generic minocycline tablets. Ranbaxy is currently one of three suppliers of the products, while Sun is one of only a limited number of firms likely to sell generic minocycline tablets in the United States in the near future. Sun’s entry likely would have resulted in significantly lower prices for these drugs.

Under the proposed settlement, Sun and Ranbaxy must also sell Ranbaxy’s generic minocycline capsule assets to Torrent, to enable Torrent to achieve regulatory approval for a change in ingredient suppliers for its minocycline tablets as quickly as Ranbaxy would have been able to do in the absence of the deal. In addition, Sun and Ranbaxy must supply generic minocycline tablets and capsules to Torrent until the company establishes its own manufacturing infrastructure. The FTC has appointed an interim monitor to ensure that Torrent receives the support it needs from Sun and Ranbaxy during the divestiture process.

Additional information about the proposed merger and the FTC’s consent agreement can be found in the FTC’s analysis to aid public comment.

The Commission vote to issue the complaint and accept the proposed consent order for public comment was 5-0.

The FTC will publish the consent agreement package in the Federal Register shortly. Public comments may be submitted until March 3, 2015. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

Companies: Sun Pharmaceutical Industries Ltd.; Ranbaxy Laboratories Ltd.; Torrent Pharmaceuticals Ltd.

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