Anti-Trust Hurdle : Terms set for Lupin-Gavis deal

Lupin will have to divest two drugs sold by Gavis Pharmaceuticals LLC to settle anti-trust charges ahead of its proposed acquisition of the latter.

In July last year, Lupin, which is India’s third largest drug maker by sales, had announced that it would be acquiring the privately held Gavis for $880 million in a bid to strengthen its presence in the US market.

The Mumbai-based firm had then said that Gavis’s filings had a potential market value of $9 billion. Gavis had generated sales of $96 million in 2013-14 and it had then over 66 generic drug filings with the US drug regulator.

 However, the US Federal Trade Commission (FTC) feels that the acquisition will be anti-competitive and to preserve competition, Lupin and Gavis will have to sell the rights and assets for two generic drugs. Of this, one is used to treat bacterial infections and the other to treat ulcerative colitis.

“Without a divestiture, the merger would have combined two of only four companies that currently market generic doxycycline monohydrate capsules in two dosage strengths, used to treat bacterial infections, likely resulting in higher prices,” the FTC said in an order released on Friday.

“The merger would have also eliminated one of only a few companies likely to enter the market for generic mesalamine extended release capsules, used to treat ulcerative colitis, in the near future, thereby delaying beneficial competition and the prospect of price decreases.”

Under the terms of the order, the two drugs of Gavis, used to treat bacterial infections and ulcerative colitis, will be sold to New Jersey-based generic drug maker G&W Laboratories.

G&W will start selling the drug for bacterial infection immediately. The transfer will include Gavis’ manufacturing technology for the bacterial infection drug that Lupin will help G&W set up at the latter’s facilities. Till then, Lupin will have to supply G&W with the finished product for two years.

The FTC order also requires Gavis to divest its rights and assets related to generic mesalamine capsules, used to treat ulcerative colitis, to G&W before the acquisition takes place.

“Gavis’s CEO will provide consulting services to help G&W complete the required regulatory work and begin manufacturing the product. Gavis and Lupin are also required to transfer all confidential business data related to both divested products, and provide access to knowledgeable employees, so that G&W can obtain all necessary FDA approvals in a timely manner,” the FTC said.