Reuters, September 1 – Amgen (AMGN.O) has been given permission by the US Federal Trade Commission to complete the $27.8 billion acquisition of Horizon Therapeutics (HZNP.O) as part of a settlement that forbids the pharmaceutical company from engaging in anticompetitive behaviour.
The FTC filed a lawsuit in May on worries that Amgen would use its drugs to obtain advantageous insurance coverage terms for Horizon’s thyroid eye disease treatment Tepezza and gout medication Krystexxa. The accord, which was announced on Friday, puts an end to months of uncertainty surrounding the deal.
Amgen is forbidden by the terms of the FTC settlement from combining any of its products with Tepezza or Krystexxa, as well as from using any product rebate or contract clause to exclude or penalize goods that would compete with those medications.
Additionally, it forbids Amgen from acquiring any rival products to the two Horizon medications without the FTC’s approval.
Despite the fact that neither company’s drugs directly compete with the other’s, Commission officials concentrated on the deal’s justification and evaluated how the merger would alter the combined company’s ability and incentive to stifle competition, according to a statement from FTC Chair Lina Khan.
On May 16, the FTC launched a lawsuit in an unusual attempt to stop a significant pharmaceutical purchase. However, the agency delayed its legal action in late August, giving it time to decide whether or not to settle the matter.
Concerns about tighter regulation of mergers and acquisitions in a field that frequently uses consolidation to fuel future growth when the patents on earlier medicines expire were highlighted by the complaint.
“We believe this (settlement) is not a surprise and that it is positive for the M&A space in the sector; however, we also believe this could be a theme in future M&A wherein such restrictions… will apply to all future transactions,” said Truist analyst Robyn Karnauskus.
According to the FTC, industry consolidation has given businesses the authority to undertake discriminatory tactics that could push up the cost of necessary pharmaceuticals.
Khan stated, “Deeper concerns about how pharmaceutical companies and pharmacy benefit managers may collaborate to deny Americans access to affordable drugs” are highlighted by the bundling and exclusionary rebating tactics at issue in this matter.
The merger is anticipated to be finalized early in the fourth quarter by the companies.
Early trading saw an almost 3% increase in Horizon’s shares, while Amgen’s shares only slightly increased. Shares of Seagen Inc. (SGEN.O), which Pfizer (PFE.N) is acquiring, increased 1.5%.