The Federal Trade Commission today cleared the way for Schering-Plough's $41.1 billion acquisition of Merck & Co., but required both companies to make significant divestures.
Under the terms of the FTC's consent order, Merck must sell its interest in Merial Limited, an animal health joint venture with Sanofi-Aventis, and Schering Plough must sell its assets related to drugs that treat nausea and vomiting in humans.
The animal joint venture, Merial, generated global revenues of $2.6 billion in 2008, according to the FTC. Merck will sell its interest to Sanofi-Aventis. The FTC was concerned that the combined companies would dominate the market for poultry vaccines - Merial and Schering-Plough together account for about 75 percent of U.S. sales of such vaccines. The two companies are also leaders in medication treating cattle follicular cysts.
The deal also raised concerns related to human drugs. At the time of the merger, Schering-Plough was working on a nausea drug, rolapitant, that would have competed with Merck’s drug, Emend. Both are known as NK 1 receptor antagonists, used for chemotherapy patients and for post-operative nausea and vomiting.
The transaction “likely would have reduced the combined firm’s incentive to launch rolapitant, delaying or eliminating a future entrant to the market,” according to the FTC. Schering Plough must sell its rolapitant-related assets to Opko Health Inc. within 10 days of acquiring Merck.
“The Commission analyzed the likely impact of this proposed transaction and is confident that its order will ensure continued competition in the relevant human and animal health care markets,” said Bureau of Competition Director Richard Feinstein in a statement.
The FTC vote was 2 – 0, with commissioners Pamela Jones-Harbour and William Kovacic recused.
The two companies announced the deal in March of 2009, and the post-merger company will be called Merck.
Schering Plough was represented by William Henry of Howrey, and Merck retained Peter Guryan of Fried, Frank, Harris, Shriver & Jacobson and Thomas Barnett of Covington & Burling.