Transactions in the Pharma Sector: Through the EU Merger Review Looking-Glass

“At least I know who I was when I got up this morning, but I think I must have been changed several times since then.” – Lewis Carroll, Alice in Wonderland

The pharmaceutical industry is dynamic when it comes to mergers and acquisitions. According to the Dechert Antitrust Merger Investigation Timing Tracker (DAMITT), the pharmaceutical sector represented 12% of significant merger investigations in the European Union and 28% in the United States. For this purpose we treat an EU investigation as “significant” if it required concessions as the price of a clearance after the initial phase of procedure, so-called Phase 1, or if it required examination in the longer Phase 2. DAMITT takes an equivalent approach in the US, allowing for the different procedures there.

As a consequence, the EU Commission has reviewed many cases and developed a well-established body of decisions demonstrating how markets are defined and assessed in the pharmaceutical sector. This track record facilitates advance consideration of candidate deals and allows the review process to go more quickly than often seen in other sectors. However, the duration of pre-notification discussions (i.e. the preparatory dialogue before formal filing occurs) should not be overlooked, and new developments in the Commission’s decisional practice should warrant some caution from pharmaceutical companies contemplating acquisitions.

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