We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
18 February 2010
Under a consent agreement announced on October 29 2009, Merck & Co, Inc must sell its interest in Merial Limited, an animal health joint venture with Sanofi-Aventis SA, and Schering Plough must sell its assets related to significant drugs for nausea and vomiting in humans, in order for Merck and Schering-Plough to complete a proposed $41.1 billion combination.
Under a merger agreement announced on March 8 2009, Merck and Schering-Plough proposed to combine under the Merck name, with Schering-Plough stockholders receiving cash and stock in a transaction valued at approximately $41.1 billion. However, according to the Federal Trade Commission (FTC) complaint, Schering-Plough's acquisition of Merck would have violated US antitrust laws by reducing competition in a range of animal health markets in which the companies compete. The companies are two of the leading animal health suppliers in the United States, and the proposed acquisition raised significant concerns in markets where Merck, through Merial, and Schering-Plough compete directly. The FTC complaint also alleged that the transaction raised competitive concerns regarding human drugs known as NK1 receptor antagonists. Nausea and vomiting are common side effects of both chemotherapy and surgery. Merck's Emend® is the first and only NK1 receptor antagonist approved for human use to treat such side effects. However, Schering-Plough was in the process of licensing rolapitant, its own NK1 receptor antagonist, to a third party when the company's acquisition of Merck was announced.
Under the terms of the FTC consent order, Merck must divest all its interest in Merial and Schering-Plough must sell assets related to rolapitant. The order requires Merck to sell its interest in Merial to Sanofi-Aventis, its current partner in the joint venture. In mid-September 2009 Merck completed this sale and terminated the joint venture agreement with Sanofi-Aventis in response to concerns raised by the FTC. Schering-Plough must sell its rolapitant-related assets to Opko Health, Inc within 10 days of acquiring Merck.
The FTC press release indicated that it conducted its investigation with the cooperation of enforcement counterparts in Australia, Canada, the European Union, Israel, Mexico and New Zealand that were also reviewing or already had reviewed the proposed merger.
The settlement announced by the FTC on October 14 2009 followed a 10-month investigation of Pfizer Inc's proposed $68 billion acquisition of Wyeth. That consent agreement required significant divestitures in multiple US markets for animal pharmaceuticals and vaccines. The FTC issued a statement with the consent agreement explaining that FTC staff had thoroughly investigated numerous potential overlaps where the companies may compete against each other in the human pharmaceutical area, as well as the transaction's broader impact on incentives to innovate and marketing practices. The FTC concluded that the evidence demonstrated that the transaction was unlikely to:
According to the FTC complaint, Pfizer's acquisition of Wyeth would reduce competition in several US markets for the manufacture and sale of animal vaccines and animal pharmaceutical products. A description of each product, its uses and the market shares held by Pfizer and Wyeth can be found in the "Analysis to aid public comment" on the FTC consent order. The complaint charged that the proposed transaction was likely to harm competition in each of the relevant markets by reducing the number of suppliers and leaving veterinarians and other animal health product customers with limited options.
Under the terms of the FTC proposed consent order, Pfizer agreed to sell approximately half of Wyeth's Fort Dodge US animal health business to Boehringer Ingelheim Vetmedica, Inc within 10 days of the acquisition. The Fort Dodge assets to be sold include vaccines for cattle, dogs and cats, and other pharmaceutical products used in treating cattle, dogs, cats and horses. Pfizer will also sell its horse vaccines to Boehringer Ingelheim. The order also requires Pfizer to provide some key services to Boehringer Ingelheim on an interim basis to ensure that it can compete after the deal is completed and to provide the necessary regulatory approvals, brand names, marketing materials, customer contracts and other assets needed to market the products in the United States. In addition, Pfizer will return its exclusive distribution rights for a product to treat tapeworms in horses to Virbac SA, the manufacturer of the product, to restore competition in the market for that product.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.