US regulator sets terms to clear Sun’s acquisition of Ranbaxy

Divested assets are to be bought by Torrent Pharma

January 31, 2015 01:21 pm | Updated 10:18 pm IST - Mumbai

Scientists at the testing facility at Sun Pharmaceuticals' research and development Centre at Baroda. File photo

Scientists at the testing facility at Sun Pharmaceuticals' research and development Centre at Baroda. File photo

In order to settle a U.S. Federal Trade Commission (FTC) charge that Sun Pharmaceutical Industries’ proposed $4-billion acquisition of Ranbaxy Laboratories would likely be anti-competitive, both companies have agreed to divest Ranbaxy’s interests in generic minocycline tablets.

The divested assets are to be bought by Torrent Pharmaceuticals, an Indian pharmaceutical company that markets generic drugs in the U.S., according to a statement by the US FTC.

Generic minocycline tablets are used to treat a range of bacterial infections such as pneumonia, acne, and urinary tract infections.

As per the FTC complaint, the proposed merger would “likely harm future competition by reducing the number of suppliers in the U.S. markets for three dosage strengths (50 mg, 75 mg and 100 mg) of generic minocycline tablets.”

Ranbaxy is currently one of three suppliers of the products, while Sun is one of only a limited number of firms likely to sell generic minocycline tablets in the US in the near future. “Sun’s entry likely would have resulted in significantly lower prices for these drugs,” the statement said.

Under the proposed settlement, Sun and Ranbaxy must also sell Ranbaxy’s generic minocycline capsule assets to Torrent, to enable Torrent to achieve regulatory approval for a change in ingredient suppliers for its minocycline tablets as quickly as Ranbaxy would have been able to do in the absence of the deal. In addition, Sun and Ranbaxy must supply generic minocycline tablets and capsules to Torrent until the company establishes its own manufacturing infrastructure.

The FTC has appointed an interim monitor to ensure that Torrent receives the support it needs from Sun and Ranbaxy during the divestiture process.

The Commission, which is a consumer protection body, issues an administrative complaint when it has ‘reason to believe’ that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.

On December 5, 2014, the Competition Commission of India (CCI) had passed an order approving the acquisition of Ranbaxy by Sun Pharmaceuticals. One of the pre-conditions of the Order was that the parties procure the divestment of seven products which constituted less than one per cent of the combined entity’s revenues in India.

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