Competition law issues in the merger of Mylan and Pfizer’s Upjohn division
- In July 2019, Mylan N.V. (Mylan) and Pfizer Inc. (Pfizer) entered into a global deal to merge Pfizer’s Upjohn division (Upjohn) with Mylan to form a new entity to be known as ‘Viatris’, which has been expected to generate annual revenues of between US$19 and $20 billion.
- With both Mylan and Pfizer already having significant involvement in Australian pharmaceutical product markets, the Viatris merger was the subject of a public review by the ACCC.
- The ACCC ultimately determined not to oppose the merger upon receipt of court enforceable undertakings from the Pfizer and Mylan parties, requiring the parties’ divestiture of a portfolio of 3 off-patent cardiovascular and glaucoma treatment products to an approved purchaser.
- The ACCC approved Aspen Global as the ultimate buyer of the divestiture portfolio.
In March this year, the ACCC commenced its review of the transaction under the Informal Merger Review Process Guidelines.
Generally, if the ACCC determines that a proposed merger may have the effect of lessening competition, a public review will take place. In this case, the ACCC invited submissions from segments of the pharmaceutical industry and the public in addition to requests for further information from Mylan and Pfizer to help it reach a decision.
Through this process, the ACCC identified Mylan and Pfizer/Upjohn as competing across a range of therapeutic products and was concerned that the merger would significantly reduce competition for the supply of pharmaceutical products based on 3 active ingredients that are used in treatments for cardiovascular conditions and types of glaucoma.
Currently, Mylan and Upjohn are the only suppliers of Amlodipine/Atorvastatin products to the Australian market. The ACCC argued that the proposed merger will in effect, make ‘Viatris’ the only supplier of these products in the Australian market.
Additionally, the ACCC was concerned that remaining competitors for medicines based on Latanoprost and Latanoprost/Timolol, would not be a sufficient constraint on ‘Viatris’.
On 10 September 2020, after a review period of 102 days, the ACCC announced it would not oppose the proposed merger, subject to Mylan and Pfizer complying with court enforceable undertakings (discussed below). As at the time of writing this article, the ACCC is yet to publish a Public Competition Assessment detailing its market definition and competition analysis.
In response to the ACCC concerns, Mylan and Upjohn offered divestment undertakings under section 87B of the Competition and Consumer Act 2010 (Mylan/Upjohn Undertaking), agreeing to sell the portfolio of three branded products:
- Caduet – based on the active ingredients Amlodopine/Atorvastatin;
- Xalatan – based on the active ingredient Latanoprost; and
- Xalacom – based on the active ingredients Latanoprost/Timolol,
to an ACCC-approved purchaser.
With the benefit of the undertakings, the ACCC was satisfied the merger would not have the effect of substantially lessening competition in a market in Australia. The ACCC was satisfied that Caduet, Xalatan and Xalacom are well established brands, and they will provide their purchaser a strong opportunity to compete against ‘Viatris’.
The acceptance of divestiture undertakings by the ACCC as a way to overcome competition concerns is a common approach in mergers and acquisitions, including in the human and animal healthcare sector, including:
- Elanco’s July 2020 acquisition of Bayer AG’s animal health business – where divestment overcame ACCC concerns about a lessening of competition in sheep lice products and gastro intestinal worming treatment for companion animals;
- Aspen’s 2010 acquisition of Sigma’s Australian pharmaceutical business; and
- Pfizer’s own September 2009 acquisition of Wyeth Corp’s animal health business – where divestiture overcame concerns about a substantial lessening of competition for pharmaceutical products for cattle and sheep worming.
The ACCC approved Aspen Global Incorporated as the approved purchaser which will distribute the products in Australia through Aspen Pharmacare Australia.
In April 2020, the European Commission (EC) granted conditional approval of the merger after the merger parties agreed to divest certain Mylan generic products across 20 countries in the European Economic Area and the United Kingdom. The EC has since approved the proposed divestiture business buyers and Mylan has entered into agreements with those buyers on terms the EC has accepted.
Almost contemporaneously with the ACCC’s decision, the Commerce Commission of New Zealand also granted clearance for the merger, subject to the divestment of a portfolio of 4 products in that jurisdiction.
The final hurdle to the merger was approval from the Federal Trade Commission (FTC) in the United States. The FTC’s concerns were overcome by divestment of seven generic products and requiring Upjohn, Mylan or Viatris to obtain FTC approval before gaining an interest in or exercising control over any third party’s rights to three other products.
On 16 November 2020, Pfizer announced that the transaction had completed.
This article was published in Edition 2 of The Prescription.
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