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11 November 2021Muireann Bolger

FTC insists generics ANI and Novitium divest IP before merger

The  Federal Trade Commission (FTC) has stipulated that generic drug marketers  ANI Pharmaceuticals, and  Novitium Pharma must divest IP rights to  Prasco ahead of their $210 million merger.

According to an  announcement released by the FTC on Wednesday, November 10, divestitures must be made for generic sulfamethoxazole-trimethoprim oral suspension, also known as  SMX-TMP, and generic  dexamethasone tablets.

Generic SMX-TMP oral suspension is an antibiotic used to treat a variety of infections, including ear infections, urinary tract infections, and bronchitis. ANI is a participant in this market, while Novitium is one of a limited number of companies well positioned to enter.

Generic dexamethasone tablets are an oral steroid product used to treat inflammation associated with a variety of conditions, including certain types of arthritis, allergic reactions, skin diseases, and breathing problems.

Both ANI and Novitium have products in development in this market and the acquisition would eliminate a potential entrant in an already concentrated market, according to the FTC.

“Today’s settlement preserves future competition in two important generic pharmaceutical markets by ensuring that ongoing product development efforts for both drugs are in the hands of firms that have the same incentive to enter the market and drive down prices as existed between ANI and Novitium prior to the merger,” said Holly Vedova, director of the US Bureau of Competition.

“Preserving the potential for entry ensures that the merged firm does not kill off ongoing product development efforts that could cause prices for its products to go down. We will remain vigilant in our efforts to protect existing and future competition in pharmaceutical markets,” she added.

Under the terms of the proposed order, ANI and Novitium are required to divest ANI’s rights and assets to generic SMX-TMP oral suspension and generic dexamethasone tablets to Prasco within 10 days after the acquisition is final.

According to the FTC, Prasco is a capable purchaser with experience marketing and distributing generic pharmaceutical products, and it will be able to replace the competition otherwise lost from the acquisition.

The proposed order also protects competition going forward as it contains a prior approval provision that gives the Commission notice and approval rights for future related acquisitions in these markets, the FTC added.

Specifically, it contains a prior approval provision that requires ANI and Novitium to obtain Commission approval before acquiring any other SMX-TMP oral suspension or dexamethasone tablet product.

It also requires the FTC’s  approval before the companies may acquire any rights or interests in certain products that have erythromycin and ethylsuccinate as the active ingredients.

While the two companies do not currently compete in erythromycin and ethylsuccinate products, ANI sells a product containing the ingredients and Novitium owns an unexecuted option to acquire a similar product.

This prior-approval provision allows the Commission to evaluate whether a future acquisition of the erythromycin and ethylsuccinate product would reduce competition at the time the acquisition is proposed.

Prasco is prohibited under the order from selling the acquired products for a combined period of 10 years after the order is issued, except to an acquirer that receives prior approval from the Commission.

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