By Tom Fairless
BRUSSELS--Drug giants Novartis AG and GlaxoSmithKline PLC won
European Union regulatory approval Wednesday for a complicated
series of deals worth more than $20 billion that will focus
Novartis' scope and turn Glaxo into a vaccines-and-consumer-drug
powerhouse.
The European Commission, the EU's top antitrust authority, said
the deals could go ahead provided the companies divest a number of
assets and sign distribution agreements aimed at assuaging
competition concerns.
Novartis of Switzerland agreed last April to buy
GlaxoSmithKline's high-margin oncology unit for up to $16 billion,
while Novartis agreed to sell its lower-margin vaccines division to
GSK for $5.25 billion. GSK and Novartis are also creating a joint
venture, majority owned by GSK, for its consumer
business--essentially those drugs that can be bought over the
counter--creating a new giant in that business. The combined
companies will have revenue of about $11 billion and include
household names like Excedrin and Panadol.
The commission had concerns that the latter two transactions
would "have eliminated an important competitor to GSK for the
supply of several vaccines and consumer health products, which
might lead to price increases for European consumers," the
regulator said in a statement.
To dispel those concerns, Glaxo agreed to divest a number of
business lines and vaccines, including cold and flu treatments and
a smoking cessation business. It also agreed to enter into supply
agreements for two vaccines.
The commission was also concerned that the sale of GSK's
oncology business would have "reduced competition and innovation"
for a number of cancer drugs. To allay those concerns, Novartis
agreed to return the rights of one cancer drug, MEK162, to its
owner and licenser, Array BioPharma Inc., and to divest another
drug to Array.
Separately, the commission also approved Mylan Inc.'s $5.3
billion acquisition of part of Abbott Laboratories' generic-drugs
business. The approval is conditional on the sale of certain
businesses in Germany, the U.K., France, Ireland and Italy, the
commission said.
Write to Tom Fairless at tom.fairless@wsj.com
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