The FTC Requires Largest-Ever Generic Drug Divestiture

August 01, 2016
The U.S. Federal Trade Commission (FTC) recently announced a settlement resolving its competitive concerns over the merger of two leading generic drug manufacturers – Teva and Allergan. In July 2015, Teva agreed to acquire the Actavis generic drug business from Allergan for US$40.5 billion. Eight months later, in March 2016, the European Commission (EC) approved the acquisition subject to divestitures of certain products sold in 24 European countries. While the EC has yet to identify the products, it described the divestiture package as “comprehensive.” The FTC’s action, taken on July 27, 2016, significantly adds to the divestiture package – covering rights to 79 products sold or in development in the United States.

Dechert’s analysis of recent FTC reviews of generic drug mergers demonstrates that Teva/Actavis stands out on several dimensions. From 2014 to the present, the FTC has taken enforcement actions against 15 generic drug mergers including Teva/Actavis. Compared to the other 14, Teva/Actavis took longer, involved many more products, and required more buyers. The Teva/Actavis investigation took 12 months, compared to an average of 5.9 months. Its resolution required the divestiture of 79 products, compared to an average of 3.4 products. And the divestitures are to be made to 11 divestiture buyers, compared to an average of 1.4 divestiture buyers.

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