FTC clears Mylan merger with Pfizer’s Upjohn – with conditions

Mylan’s $12 billion takeover of Pfizer’s Upjohn unit has been cleared by the US authorities, but on the condition that the two companies divest various generic drug products.

The Federal Trade Commission (FTC) has ruled that the combined company – to be called Viatris – could have an anticompetitive position in the US market for seven generic drugs used for high blood pressure, heart failure, epilepsy, bacterial infections and uterine bleeding if the divestments don’t go ahead.

The FTC’s ruling means that Pfizer and Mylan have now obtained all the antitrust approvals needed for the merger to go ahead. Upjohn is now due to be spun off from Pfizer on 13 November, with the merger concluding three days later – around 16 months after first being announced. It was backed by the European Commission in mid-September.

Once formed, Viatris will be a generics behemoth with annual sales of around $19 to $20 billion and operations in 165 markets around the word. Mylan shareholders will hold approximately 43% of the new venture, with Pfizer investors taking 57%.

The deal is structured in a similar way to Pfizer’s joint venture with GlaxoSmithKline in consumer health, allowing the company to shed off lower-margin products whilst retaining an interest and generating cashflow to invest in its new product pipeline.

Mylan meanwhile will benefit from Upjohn’s greater global reach, allowing its generics to grow more quickly, according to the companies.

The generics that have to be divested include medroxyprogesterone, amlodipine besylate/atorvastatin, phenytoin, prazosin, spironolactone, gatifloxacin, and eplerenone products, according to the FTC.

Upjohn's amlodipine besylate/atorvastatin, phenytoin, prazosin, spironolactone, gatifloxacin and medroxyprogesterone products must be divested to Prasco, and Mylan’s eplerenone product must also be shed.

The FTC was also concerned about three other drugs – sucralfate to treat and prevent ulcers in the small intestines, levothyroxine for hypothyroidism, and varenicline, the active ingredient in Pfizer’s smoking cessation brand Chantix.

The approval conditions also require a green light from the FTC before Pfizer, Mylan or Viatris may “gain an interest in, or exercise control over, any third party's rights” to levothyroxine, sucralfate and varenicline tablets.

The divested products should continue to be manufactured by Upjohn and Mylan’s current suppliers in order to avoid any shortages in the market, and in some cases Pfizer will act as a contract manufacturer to Prasco.