"A takeover of Mylan by Teva is a bad deal for consumers," claim eight US consumer organizations that have jointly written to the Federal Trade Commission (FTC) demanding that it block the Teva-Mylan deal. Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) has bid over $40 billion to buy generic pharmaceutical rival Mylan N.V. However, Mylan opposes the merger.
In the letter to FTC chair Edith Ramirez, the consumer organizations write about their growing concerns that the generic pharmaceuticals business is becoming more consolidated and add that the acquisition of Mylan by Teva would bring together the two largest manufacturers of generic drugs in the US.
The organizations wrote, "This increased consolidation has already led to higher prices and to generic drug shortages. Along with exacerbating the current drug shortages of these medications, a merger between the two largest generic manufacturers would likely eliminate more manufacturing facilities, leading to reduced production and creating other shortages of generic and specialty drugs. We call on the FTC to thoroughly investigate the merger and take steps to block it."
Data attached to the letter claims that 80% of US prescriptions are for generic drugs because their prices are so much lower than branded drugs, resulting in savings of $1.5 trillion in 2004-2013. The organization adds that consolidation in the generic market has led to price rises, which have more than doubled. The letter added that many Americans simply cannot afford generic drugs.
Teva, Mylan, Activis and Sandoz are the four largest generic drug makers in the market and a Teva Mylan merger would create a company controlling 25% of the US generic market - thus reducing competition both in existing drugs and future developments. Consumer organizations claim that by past experience selling products lines as a condition of FTC approval for the deal have not be effective. Regarding shortages, the groups believe that the merger will exacerbate the situation because manufacturing plants will be shut down thus harming supply. The organizations insist that the merger will hurt both consumers and the health of the public.
"We believe you will conclude that the merger would substantially lessen competition in violation of the antitrust laws, and should be blocked," the letter said.
Teva - the merger will create a leading and dependable supplier
Mylan, which has always claimed that the FTC would not approve the deal, welcomes the opposition by consumer groups. Mylan CEO Heather Bresch said, "The letter sent by the consumer organizations further shines a spotlight on how control of the merged Teva/Mylan company would reduce competition. This transaction also would serve to eliminate the only major generics company that is not driven by significant branded business interests, thereby silencing one of the strongest advocates for the generics industry."
Teva said in response, "A combined Teva and Mylan would create an industry-leading and dependable supplier of the broadest portfolio of high quality medicine to consumers across global markets. This combination will create a more efficient platform for the benefit of customers and consumers. There is a strategic and cultural fit in combining Teva and Mylan. Teva remains deeply committed to consummating a transaction with Mylan that offers an unparalleled opportunity for greater access to much needed medicines. This transaction is consistent with Teva’s track record of transforming the generics industry in the U.S and around the world."
Teva added, "Teva is confident it can make any necessary divestitures to achieve antitrust clearance. Teva filed for U.S. HSR antitrust clearance several months ago and has initiated the pre-merger notification process with the European Commission".
Published by Globes [online], Israel business news - www.globes-online.com - on July 16, 2015
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