Lupin told to sell two drugs for getting regulatory nod for Gavis acquisition

The US Federal Trade Commission (FTC) has asked Indian generic drug maker Lupin Ltd and its US peer Gavis Pharmaceuticals to divest two generic drugs in order to obtain regulatory clearance for their proposed merger.

The FTC says that Lupin's proposed $850-million acquisition of Gavis is likely to be anti-competitive. Lupin is therefore selling the two drugs, used to treat bacterial infections and ulcerative colitis, to New Jersey-based generic pharmaceutical company G&W Laboratories.

''Without a divestiture, the merger would have combined two of only four companies that currently market generic doxycycline monohydrate capsules in two dosage strengths, used to treat bacterial infections, likely resulting in higher prices.'' The DTC said in a statement.

''The merger also would have eliminated one of only a few companies likely to enter the market for generic mesalamine extended release capsules, used to treat ulcerative colitis, in the near future, thereby delaying beneficial competition and the prospect of price decreases,'' the FTC added.

Under the terms of the proposed order, Mumbai-based Lupin will sell to G&W Laboratories all of Gavis's rights and assets related to generic doxycycline monohydrate capsules within ten days post acquisition.

The sale includes Gavis's manufacturing technology, which Lupin will help G&W set up at the latter's facilities. In the interim, Lupin will supply G&W with the finished product for two years.

The proposed order also requires that Gavis divest its rights and assets related to generic mesalamine capsules to G&W prior to closing of the deal.

In July last year, Lupin, India's fourth-largest drug maker by sales, had agreed to buy US generic drugs manufacturer Gavis Pharmaceuticals LLC and Novel Laboratories Inc for $880 million. (See: Lupin buys US generics drug maker Gavis for $880 mn)

The cash-free and debt-free deal, widens the Indian company's pipeline in dermatology, controlled substance products and other high-value and niche generic products while strengthening its presence in the US, the world's largest market for pharma products.

New Jersey based Gavis is a privately-held company specialising in formulation development, and distribution of pharmaceuticals products.

The company recorded sales of $96 million in FY 2014 and has over 250 New Jersey-based employees. It currently has 66 ANDA filings pending approval with the US FDA and a pipeline of over 65 niche dosage forms. To date, Gavis has filed 25 Para IVs and 8 FTFs products.

Gavis's pending filings address a market value of about $9 billion.

The combined company will have a portfolio of 101 products in the market, 164 cumulative filings pending approval and a deep pipeline of products under development for the US market. The acquisition creates the fifth-largest portfolio of ANDA filings with the US FDA, addressing a $63.8-billion market.

Lupin is the fifth-largest and fastest-growing top five generics players in the US, with a market share of 5.3 per cent in prescriptions and the third-largest Indian pharmaceutical company by sales. The company is also amongst the top 10 generic pharmaceutical players in Japan and South Africa.

For the financial year ended 31 March 2015, Lupin's consolidated turnover and after-tax profit stood at Rs12599.7 crore ($2.06 billion) and Rs2403.2 crore ($393 million) respectively.