pharmafile | January 29, 2015 | News story | Research and Development, Sales and Marketing | Abbott, GSK, Mylan, Novartis, acquisition, etc, merger
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The European Commission has approved a GSK-Novartis M&A deal, in which GSK will purchase Novartis’ vaccines unit and Novartis will buy GSK’s oncology business.
Both firms announced the overhaul of their businesses in April. The multi-billion dollar contract will involve GSK acquiring Novartis’ global human vaccines business (except the influenza vaccines business) for $7.1 billion, and Novartis taking over GSK’s oncology business for up to $16 billion.
In a third part of the deal, GSK and Novartis will combine their global consumer health business in a new entity, over which GSK will have sole control.
Under the EU Merger Regulation the EC has a legal duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds, and make sure that any arrangements would not significantly impede effective competition in Europe.
The EC had concerns that the GSK-Novartis deal would affect competition in the production of vaccines and promising oncology treatments. The Commission raised the potentially detrimental effect on competition for some vaccines.
To address this GSK agreed to sell its meningitis vaccines, Nimenrix and Mencevax, on a global basis. These are marketed outside of the US and generated annual global sales of £36m in 2013. In another condition set by the EC, GSK will also divest two Novartis diphtheria and tetanus vaccines in Italy and Germany.
The oncology tranche of the deal would also have affected competition, the Commission found, by reducing the number of companies developing and marketing two investigational skin cancer treatments, B-Raf and MEK inhibitors, from three to two.
The EC report notes that these treatments “are expected to become the standard of care for the treatment of skin cancer… [and] to reach peak sales of several hundreds of millions of euros in the next few years in the EEA”.
The Commission feared that Novartis’ purchase of GSK’s oncology portfolio, which includes B-Raf and MEK inhibitors would “lead to a duopoly between the merged entity and Roche”. It was also likely to result in Novartis abandoning its clinical trials of these treatments in ovarian, colorectal and lung cancer, which would have a ‘significant impact on innovation’.
As a condition of the deal Novartis agreed to return its rights over MEK162 to its owner and licensor Array BioPharma, and to divest LGX818 to Array. “This will ensure the worldwide development of LGX818 and MEK162 as well as the commercialisation of these inhibitors in the EEA”, the Committee report says.
The EC also signed-off another major pharma pact after concluding that Mylan’s purchase of Abbott’s generics business would not adversely affect European competition. The complex deal will mean Abbott will have a 21% share in ‘New Mylan’, which will become the parent company of Mylan and continue to operate from its base in Pittsburgh, Pennsylvania.
The Commission’s investigation found that for the majority of Abbott’s generic products no competition concerns arose. However, for five generic products in Germany, the UK and Ireland, France and Italy there are a lack of substitutable products and competitors present and low likelihood of competition.
To address these concerns, Mylan will divest its businesses and marketing authorisations in these countries. Both the GSK-Novartis and the Abbott-Mylan deals are conditional upon the companies complying with these commitments.
Lilian Anekwe