Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC clears acquisitions of Hospira by Pfizer, conditioned on certain divestitures, (Aug 4, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has cleared under the European Union (EU) merger regulation the proposed acquisition of Hospira by Pfizer, the EC announced today. Both U.S.-based companies are active globally in the development and marketing of human pharmaceuticals. The approval is conditional on Pfizer divesting certain sterile injectable drugs, as well as its infliximab biosimilar drug, which is currently under development, according to the announcement.

Pfizer, headquartered in New York City, is a global research-based biomedical and pharmaceutical company active in discovering, developing, manufacturing, marketing, and selling innovative medicines for humans. Hospira, based in the Lake Forest, Illinois, is a global provider of injectable drugs and infusion technologies, with a broad portfolio of generic, branded, and biosimilar medicines for humans.

In February 2015, the companies announced in a joint press release that they had signed a definitive merger agreement valued at $17 billion. The merger was unanimously approved by the Board of Directors of both companies. The EC expressed concerns that the merged entity would have faced insufficient competitive pressure from the remaining players in the corresponding markets, with a risk of price rises and discontinuation of the development of Pfizer's infliximab biosimilar drug.

EC investigation. The Commission focused its investigation on the two product areas where Pfizer and Hospira compete—namely, biosimilar drugs and sterile injectable drugs.

Biosimilar drugs aim to have the same therapeutic mechanism as original patented biological pharmaceuticals, but, unlike generics, are not exact copies of the originator drugs. Infliximab is one of the top three best-selling pharmaceuticals globally and is used to treat autoimmune diseases. One biosimilar has been approved for use in the European Economic Area (EEA) (developed by Celltrion), and two companies have biosimilars in advanced stages of development (Samsung Bioepis and Pfizer). The investigation showed that competition concerns could arise in the market for infliximab drugs because, following the merger, Pfizer would be likely to either: (1) delay or discontinue development of its biosimilar drug in order to focus on Hospira's marketed product, leading to the net loss of future competition by one of only three differentiated biosimilars in advanced stages of development or (2) hand back Hospira's product to its developer, Celltrion, leading to the loss of current price competition between Hospira and Celltrion. Both outcomes would be detrimental to competition in the infliximab drug market.

Sterile injectables cover a large group of medicines administered with a hollow hypodermic needle (pierced through the skin). For these pharmaceuticals, the investigation showed that competition concerns could arise for certain molecules in some member states (namely, carboplatin in Belgium; cytarabine in Belgium, Italy, Portugal and Sweden; epirubicin in Austria, Belgium, Italy, the Netherlands and Spain; irinotecan in Belgium, the Czech Republic, and Italy; vancomycin in Ireland; and voriconazole in the EEA as a whole) because of the high combined market shares of Pfizer and Hospira and the limited number of competitors that would remain in these markets.

In order to address the competition concerns identified by the Commission, Pfizer offered commitments consisting of (1) full divestment of the development, manufacturing, and marketing rights of its infliximab biosimilar drug currently under development, with marketing rights outside the EEA remaining with the merging entity and (2) divestment of marketing authorizations and associated rights of Pfizer or Hospira in relation to all problematic molecules in the relevant countries.

“This is not just about keeping prices low for patients and healthcare services,” said Margrethe Vestager, Commissioner in charge of competition policy. "We have also made sure that the merger of Pfizer/Hospira does not stand in the way of the research and development of medication that could have huge benefits for society."

“We are pleased to have achieved a significant milestone for Pfizer’s pending acquisition of Hospira with the EC’s approval of the transaction,” said Ian Read, Pfizer chairman and chief executive officer. “We continue to work cooperatively with the regulatory agencies to obtain the requisite approvals, and continue to expect the transaction to close in the second half of 2015.”

Companies: Pfizer Inc.; Hospira, Inc.

News: AcquisitionsMergers Antitrust