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FTC to Closely Examine Pfizer, Mylan Deal

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Published: June 22nd, 2020
The transaction faces other regulatory hurdles, including a review by China, possible Brexit complications and clearances in nearly two dozen jurisdictions.

The Federal Trade Commission is taking a closer look at the all-stock acquisition of Mylan NV (MYL) by Upjohn Inc., a division of Pfizer Inc. (PFE), as pharmaceutical transactions face increased scrutiny in Washington.

Upjohn disclosed the “second request” for additional business and financial information in a Friday, Oct. 25, Securities and Exchange Commission filing.

The FTC notified the companies Oct. 7 about the request, which lengthens the duration of a merger review and increases the likelihood of conditions or a legal challenge—but doesn’t guarantee either outcome.

Announced July 29, the merger would combine Mylan, best known for its allergy medication EpiPen, with Upjohn, the generic drug unit of Pfizer. The companies anticipate a mid-2020 close.

The Deal reported over the summer that the transaction was announced nearly a year after Mylan formed a strategic review committee to evaluate alternatives for the company.

While Washington is consumed with reining in powerful tech giants, drug manufacturers have drawn pushback over concerns that span from out-of-control drug prices to pay-for-delay tactics intended to keep rival generics from the market.

In a June 2019 overview of its policing of the pharmaceutical industry, the FTC highlighted enforcement actions it’s previously taken against Mylan and Pfizer that resulted in transaction-related divestitures.

Adding another layer of uncertainty to Pfizer-Mylan, the combination would require clearance by several foreign competition authorities, including the European Commission and China’s State Administration for Market Regulation.

The review also could be complicated by Brexit “if the United Kingdom were to withdraw from the European Union before the issuance of antitrust clearance by the European Commission,” Upjohn explains in the filing.

Under that scenario, “the parties will also be required to obtain antitrust clearance from the UK Competition and Markets Authority if it asserts jurisdiction to review the [transaction],” the company notes.

Underscoring the increased need for international sign-offs, which can add complexity and delays to merger reviews, the tie-up would require clearances from competition authorities in 21 more countries.

They include India, Ukraine, Russia, Turkey, Botswana, Kenya, Namibia, Saudia Arabia, Taiwan and Turkey.

In September, The Deal reported that seven Democratic senators—including five presidential candidates—asked FTC Chairman Joe Simons to carefully review the $63 billion acquisition of Botox manufacturer Allergan plc (AGN) by AbbVie Inc. (ABBV) and the $74 billion purchase of Celgene Corp. (CELG) by Bristol-Myers Squibb Co. (BMY).

Editor’s note: The original version of this article, including advisers and other details, was earlier published on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.

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