On 10 September 2020, the Australian Competition and Consumer Commission ("ACCC") decided to not oppose Mylan NV’s ("Mylan") proposed merger with Pfizer’s Upjohn Inc division ("Upjohn"), despite concerns that competition in the supply of pharmaceutical products to treat cardiovascular conditions and glaucoma would significantly reduce. The ACCC's competition concerns were resolved by the parties providing court-enforceable undertakings to divest three off-patent branded pharmaceuticals to an ACCC approved buyer.
| what you need to know - key takeaways |
- In assessing a proposed pharmaceutical merger, the ACCC will consider the impact on competition in narrowly defined product markets, namely, whether there is any significant reduction in competition in the supply to pharmacies and hospitals of pharmaceutical products with particular active ingredients.
- The ACCC will accept a divestiture undertaking to resolve its competition concerns in a transaction if it considers that the competition that would be lost as a result of a merger will be replaced by competition from an ACCC-approved buyer.
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On 29 July 2019, Mylan and Pfizer Inc. proposed to enter into a transaction, which involved the separation of Upjohn from Pfizer Inc and the merger of Mylan's and Upjohn's businesses into a new combined entity known as Viatris. Mylan and Upjohn are both suppliers of cardiovascular, neurology & pain, psychiatry, urology and ophthalmology pharmaceutical products in Australia.
The ACCC was concerned that the merger would have the effect or likely effect of substantially lessening competition in the supply of pharmaceutical products used to treat cardiovascular conditions and certain types of glaucoma, to pharmacies and hospitals in Australia.
In particular, the ACCC considered Viatris would become the only supplier of Amlodipine/Atorvastatin molecules for lipid-regulating cardiovascular treatment in Australia, and that there would be insufficient competitive constraints on Viatris' pricing and service levels in the supply of Latanoprost and Latanoprost/Timolol molecules, used in the treatment of glaucoma.
In order to address the ACCC's competition concerns, Mylan and Upjohn offered a court enforceable undertaking under s.87B of the Competition and Consumer Act to divest three of its off-patent branded pharmaceuticals used to treat cardiovascular conditions and glaucoma, to an approved purchaser. The undertaking will result in the creation of a standalone competitor to supply these pharmaceutical products to pharmacies and hospitals in Australia, in competition with the new combined firm, Viatris. An undertaking from Pfizer was also required to support the divestment process, allowing Mylan and Upjohn to transfer or license certain intellectual property rights to the approved purchaser.
The ACCC has since approved Aspen Global Incorporated as the buyer of these divested brands, which will be distributed in Australia by Aspen Pharmacare Australia.
With thanks to Sheenae LeCornu of Ashurst for her contribution.
