The Federal Trade Commission approved Watson Pharmaceuticals Inc.'s $5.9 billion purchase of Swiss drug maker Actavis Inc., but is requiring the divestiture of 21 products as a condition.
Watson, the fourth-largest generic drug maker in the world, agreed to sell the rights to 18 drugs to Sandoz International GmbH and Par Pharmaceuticals Inc, and relinquish the manufacturing and marketing rights to three others. The drugs - some already on the market, other still in the pipeline - are used to treat conditions ranging from hypertension and diabetes to anxiety and attention deficit hyperactivity disorder.
On April 25, 2012, Watson and Actavis announced their deal. However, the FTC concluded that the proposed acquisition would violate Section 7 of the Clayton Act and Section 5 of the FTC Act because it would lessen competition in the generic drug market for certain products.
”In human pharmaceutical product markets with generic competition, price generally decreases as the number of generic competitors increases,” the FTC said when seeking public comment. “Accordingly, the reduction in the number of suppliers within each relevant market has a direct and substantial effect on pricing.”
Among the drugs that both companies make or are poised to make: generic Adderall XR, for attention deficit hyperactivity; generic Ativan for anxiety; generic Zyban to help people quit smoking; generic Cardizem CD for hypertension and angina; generic Duragesic for chronic pain and generic Reglan for nausea.
The FTC is requiring the companies to sell the rights to the overlapping drugs to competitors within 10 days of the acquisition. “With their experience in generic markets, Par and Sandoz are expected to replicate the competition that would otherwise be lost with the Proposed Acquisition,” according to the FTC. European antitrust regulators approved the deal on October 5.
Watson was represented by Steven Sunshine in Washington and Ingrid Vandenborre in Brussels, both partners at Skadden, Arps, Slate, Meagher & Flom.
Skadden has represented Watson in numerous matters — including, most recently, securing a successful summary judgment ruling for the company in a consolidated MDL brought by purchasers of AndroGel.