Sector News

FTC puts conditions on Eli Lilly’s proposed acquisition of Novartis Animal Health

December 26, 2014
Life sciences
US pharma major Eli Lilly has agreed to divest its Sentinel product line of medications for treating heartworm disease in dogs in order to settle US Federal Trade Commission charges that its proposed acquisition of Novartis Animal Health from Swiss drugs giant Novartis would likely be anticompetitive.
 
Earlier this year, Novartis has agreed to divest its Animal Health Division to Lilly for around $5.4 billion (The Pharma Letter April 22). Under the proposed settlement, Eli Lilly will divest its Sentinel product line and associated assets to the French pharmaceutical company, Virbac SA.
 
Eli Lilly, through its Elanco Animal Health division, and the Novartis Animal Health business unit both develop and market a wide range of animal health products, including medications to treat diseases and conditions affecting pets and livestock.
 
The FTC’s complaint challenging the transaction alleges that the proposed acquisition would be anticompetitive and lead to higher prices. Canine heartworm parasiticides are used to treat heartworm disease in dogs and are available in a variety of formulations, some of which are given orally while others are applied to a dog’s skin or injected.
 
Trifexis and Sentinel products close substitutes
 
According to the complaint, Eli Lilly’s Trifexis and Novartis Animal Health’s Sentinel products are particularly close substitutes because they are the only two products that are given orally once a month, contain the same active ingredient, and also treat fleas and other internal parasites in dogs.
 
The complaint alleges that, without the divestitures required by the proposed order, the transaction would have eliminated the close competition between Eli Lilly and Novartis Animal Health and substantially decreased competition in the market for canine heartworm parasiticides. Also, any other company seeking to enter the canine heartworm parasiticide market would face high barriers, because developing new animal health pharmaceutical products – including those that treat heartworm in dogs – is difficult and time-consuming, the complaint alleges.
 
The Commission vote to accept the complaint and proposed consent order for public comment was 5-0.
 

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