US regulators grant conditional approval to Abbott's acquisition of St. Jude Medical
28 December 2016
The US Federal Trade Commission (FTC) said that the proposed consent order requires both companies to divest to Tokyo-based medical device maker Terumo Corporation all rights and assets related to St. Jude's vascular closure device business and Abbott's steerable sheath business.
The FTC said that without a remedy, the proposed acquisition would harm competition in the US markets for vascular closure devices, which are used to close holes in arteries from the insertion of catheters, and for ''steerable'' sheaths, which are used to guide catheters for treating heart arrhythmias.
Without a remedy, the merged firm would control more than 70-per cent of the market for vascular closure devices.
St. Jude has held a near-monopoly in the market for steerable sheaths for more than a decade. Abbott recently entered the market, and the transaction would eliminate any competition between them.
Terumo does not currently sell any vascular closure devices or steerable sheaths but has sold related products and medical devices in the US market for more than 30 years, and has the industry experience and reputation necessary to replace competition, according to the FTC.
The order requires both companies to assist Terumo with establishing its manufacturing capabilities.
Under the proposed order, Abbott is also required to notify the FTC if it intends to acquire lesion-assessing ablation catheter assets from Advanced Cardiac Therapeutics, known as ACT.
Currently, only St. Jude and one other company provide lesion-assessing ablation catheters in the US. Abbott and ACT have formed a partnership to develop these catheters. After the acquisition of St. Jude, if Abbott acquired lesion-assessing ablation catheter assets from ACT, it could eliminate additional competition that would result from an independent ACT, the FTC said.
The European regulator had in November approved the deal on condition that Abbott divests two devices used in cardiovascular treatments. (See: European regulator conditionally approves Abbott's $25-bn deal for St Jude Medical) In April, Abbott agreed to buy St Jude Medical for $25 billion in order strengthen its heart and neurological devices business.
Abbott has recently been selling non-core businesses and strengthening its core business through acquisitions in order to focus on its cardiovascular devices and diagnostics business.
Earlier this year, it sold its medical optics division to Johnson & Johnson for $4.3-billion and proposed to buy diagnostic test maker Alere Inc for $5.8 billion.
But it is trying to terminate the Alere deal citing "substantial loss" in the value of the company since the merger agreement was signed in February. (See: Abbott seeks to terminate $5.8-bn acquisition of Alere) After the deal was announced, the US Department of Justice served Alere two separate subpoenas based on its investigations into Alere's sales practices, and patient-billing records related to Medicare, Medicaid and Tricare. The company lost reimbursement on its Medicare business.
Alere also delayed filing its financial statements for six months and disclosed probes into billing and foreign sales practices.
In July, the US health regulator forced Alere to recall a device used to monitor levels of a widely used blood thinner because it was found to generate faulty results.