US regulator orders divestitures in Boehringer-Sanofi asset swap deal

The US antitrust regulator has ordered German pharmaceutical company Boehringer Ingelheim to divest five types of animal health products for it to approve its asset swap deal with French drug giant Sanofi.

In late June, Sanofi agreed to swap its €11.4-billion Merial animal-health business for Boehringer's €6.7-billion global consumer-health operation excluding in China, and Boehringer proposed to offset the price difference by paying Sanofi €4.7 billion in cash.

The US Federal Trade Commission (FTC) yesterday said that without the divestitures the proposed asset swap would harm competition in the US markets for various vaccines for companion animals (pets) and certain parasite control products for cattle and sheep.

The transaction could also lead to higher prices and reduced service in these markets, and could increase the likelihood of coordinated interaction between competitors, the FTC said in its complaint.

Under the proposed consent order, Boehringer Ingelheim has agreed to divest the companion animal vaccines to Eli Lilly and the company's Elanco Animal Health division, and the parasite control products to Bayer AG.

Without the divestitures, the proposed swap "would harm competition in the U.S. markets for various vaccines for companion animals (pets) and certain parasite control products for cattle and sheep," the FTC added.

In November, the European Commission approved the deal on condition that both companies divest several of Merial's marketed and pipeline products, including its existing vaccines Circovac, Progressis, Parvovax, Parvovurax and Mucossifa and pharmaceuticals Ketofen, Wellicox, Allevinix, Genixine, Equioxx Injectable and Equioxx Paste.

Sanofi and Boehringer Ingelheim have substantial businesses in India in the animal health and consumer health products segments, and the Competition Commission of India  had approved the deal without conditions saying that the transaction would not adversely affect competition in the country.