Amgen’s $28 billion deal to accumulate Horizon Therapeutics has hit a regulatory impediment. The Federal Commerce Fee is suing to dam the transaction, contending it will enable Amgen to make the monopoly positions of two Horizon medicine even stronger.
The FTC go well with, filed Tuesday in U.S. District Court docket for the Northern District of Illinois, comes because the regulator retains a detailed eye on M&A exercise within the life sciences sector. Some business observers concern the scrutiny on the Amgen deal might clamp down on the broader dealmaking atmosphere.
Horizon’s two prime merchandise are for uncommon illnesses. Tepezza treats thyroid eye illness and is a blockbuster vendor accounting for greater than $1.9 billion in international gross sales final yr. Krystexxa, projected to grow to be a blockbuster drug, treats persistent refractory gout. Neither product has a competitor available on the market to this point, although potential rivals have drug candidates for each indications in varied phases of medical improvement.
When Amgen introduced the settlement to accumulate Horizon late final yr, the Thousand Oaks, California-based pharma large framed Horizon’s product portfolio and pipeline as complementary to its personal. Amgen’s prime product is the autoimmune dysfunction remedy Enbrel, however the firm has been looking for merchandise that may offset income declines going through the drug as its patents expire.
Normally when the FTC strikes to dam M&A exercise, it’s due to issues concerning the focus of market energy coming from the overlap of merchandise from the businesses which are coming collectively. In such circumstances, one treatment is promoting off belongings to a different celebration. However Amgen and Horizon have little product overlap and that’s not the argument the regulator is making now.
As an alternative, the FTC says Amgen would be capable to use its personal blockbuster medicine for negotiating leverage with payers and pharmacy profit managers (PBMs). The company says Amgen has a historical past of “cross-market bundling,” which is the follow of providing rebates on a product, reminiscent of Enbrel, in alternate for getting most well-liked placement an insurer or PBM’s checklist of coated medicines.
“The worth of the rebates that Amgen can supply on its high-volume medicine as a part of its cross-market bundles could make it tough, if not not possible, for smaller rivals who’re growing medicine to compete towards Tepezza and Krystexxa to match the extent of rebates that Amgen would be capable to supply,” the FTC mentioned.
In a coverage assertion issued final June, the FTC mentioned monetary relationships amongst firms within the prescribed drugs sector can misalign incentives in a method that stifles competitors. The company additionally has an ongoing inquiry into how PBMs have an effect on the entry and affordability of medicines. FTC scrutiny on M&A exercise has been retaining one mega-merger from closing. Litigation over Illumina’s proposed acquisition of liquid biopsy firm Grail has continued for greater than two years. In April, the FTC ordered Illumina to divest Grail.
Amgen issued an announcement saying it has been working with the FTC to deal with questions raised by its investigative workers and “consider we’ve overwhelmingly demonstrated that this mix poses no respectable aggressive points.”
Amgen mentioned its merchandise and Horizon’s deal with completely different illnesses and affected person populations. The corporate didn’t dispute the FTC’s argument that the corporate has engaged in bundling practices. However Amgen known as the declare that it would bundle medicines in some unspecified time in the future sooner or later speculative, and never reflective of the real-world aggressive dynamics of offering uncommon illness medicines to sufferers. Amgen additionally mentioned it has dedicated to not bundle the Horizon merchandise, and it’s unaware of any acquisition blocked as a result of a bundling principle.
In a analysis word, William Blair analyst Matt Phipps wrote that the go well with blocking the Horizon acquisition will dampen M&A enthusiasm throughout the biotech sector, notably in gentle of the shortage of overlap throughout the Amgen and Horizon portfolios. Nonetheless, he added that the FTC has not blocked acquisitions of smaller firms the place one late-stage or business product is the principle driver of the deal. Such transactions doubtless received’t face a lot scrutiny, besides in circumstances of product overlap, Phipps mentioned.
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