In July 2011 Valeant announced that it had entered into agreements with divisions of Sanofi and Johnson & Johnson (J&J) to acquire certain dermatology assets from each. From Sanofi, Valeant sought to acquire the Dermik skincare business, including BenzaClin (a topical acne treatment) and a topical fluorourocil cream (5FU) which is used to treat pre-cancerous lesions typically caused by extended exposure to the sun. From Janssen, Valeant proposed to acquire J&J's Ortho Dermatologics division.
In challenging the purchases from Dermik, the Federal Trade Commission (FTC) alleged that Valeant held the only abbreviated new drug application for the generic version of BenzaClin, which it licensed to Mylan for US distribution. Therefore, the FTC alleged that the acquisition would give Valeant a monopoly in a product market defined as BenzaClin and its generic equivalent. With respect to the second product, 5FU, the FTC alleged that Valeant's proposed acquisition would combine two of the three 5FU branded products on the market – Valeant's Efudex and Dermik's Carac. Although there were three generic products on the market (including the authorised generic owned by Valeant), the FTC alleged that the transaction would eliminate significant head-to-head competition between Carac and Efudex.
The FTC challenged Valeant's acquisition of Ortho Dermatologics because, post-acquisition, Valeant would hold an alleged monopoly over tretinoin emollient creams, which are used for the treatment of fine line wrinkles. The FTC defined the market to include brand and generic tretinoin emollient creams. Valeant holds co-marketing rights to Refissa, a branded cream, and a generic version. Janssen controls the only other branded cream on the market, Renova.
In order to consummate its acquisition from Sanofi, Valeant agreed to divest the generic form of BenzaClin to Mylan. Valeant agreed to manufacture and supply Mylan during the time that it takes Mylan to begin manufacturing and build up its supplies. In the case of Valeant's acquisition of Ortho Dermatologics, the FTC required Valeant to return its marketing rights for Refissa and the generic tretinoin emollient cream to its owner, Spear Pharmaceuticals.
In both cases the FTC alleged a relevant market that included the branded and generic versions of the pharmaceutical product at issue, but excluded other products that serve as potential therapeutic substitutes.
For further information on this topic please contact Leigh Oliver at Hogan Lovells US LLP by telephone (+1 202 637 5600), fax (+1 202 637 5910) or email ([email protected]).
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