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FTC eyes Watson, Actavis generic drug portfolios

by William McConnell | Published July 13, 2012 at 10:30 AM

Watson Pharmaceuticals Inc.'s bid to become the world's third-largest generic drug company through the €4.25 billion ($5.62 billion) acquisition of Switzerland's Actavis Group hf will get extended scrutiny from the U.S. Federal Trade Commission.

Parsippany, N.J.-based Watson said Thursday that it has received a second request for information from the commission,

Watson and Actavis have extensive generics portfolios and compete in more than a dozen drugs. Among the competing products are bupropion, which is a generic treatment for major depressive disorder. The companies also offer competing generic antibiotics, blood pressure medications and treatments for seizures, tremors, heartburn, bacterial infections, herpes and anxiety.

Watson said it "intends to cooperate fully with the FTC's review" and reiterated its initial prediction that the deal will close in the fourth quarter.

The acquisition would transform Watson into the world's third-largest generics company and give it a presence in 40 countries and more than 17,000 employees worldwide. Acquiring Actavis would roughly double Watson's revenue and give it scale across several European countries. Actavis has more than 1,000 products globally, and non-U.S. sales account for roughly two-thirds of total revenue.

Generic drug acquisitions tend to get a close look from the FTC and frequently lead to divestitures of specific drug products.

The FTC in 2006 required Watson to divest drugs treating acute pain and Type 2 diabetes and an oral contraceptive to gain antitrust approval for its $1.9 billion acquisition of rival generics maker Andrx Corp.

In July 2011, the commission required generic drug manufacturer Perrigo Co. to sell six generic drugs as a condition for approving Perrigo's $540 million acquisition of Paddock Laboratories Inc. The proposed settlement also contains provisions to ensure future competition in the market for generic testosterone gel products. The affected drugs were treatments for skin disorders, allergic reactions, nausea, a generic topical steroid and a generic anti-inflammatory drug.

Last October, Teva Pharmaceutical Industries Ltd. was ordered to sell the rights to three generic drugs to win approval for its $6.8 billion purchase of Cephalon Inc. The drugs were treatments to combat cancer pain, to counteract complications of sleep apnea and a muscle relaxant.

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FTC eyes Watson, Actavis generic drug portfolios

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