AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Islamabad, February 26, 2015 (PPI-OT): The Competition Commission of Pakistan (CCP) has approved acquisition of the global vaccines business (excluding influenza business except in China) of Novartis AG by GlaxoSmithKline (GSK) after concluding the Phase II review of the pre-merger application and receiving commitments to address competition concerns.
CCP initiated the Phase II review of the pre merger application received from GSK in November 2014 under section 11 of the Competition Act, 2010 to determine whether the merger situation is likely to substantially prevent or lessen competition in the relevant market. GSK and Novartis are the two main players in the vaccine business.
The overlap was detected in the Meningococcal (ACWY) vaccine, which is used against Neisseria Meningitidis, a bacterium that causes meningitis, meningococcemia, septicemia, and rarely carditis, septic arthritis, or pneumonia, which both GSK and Novartis market in Pakistan through their products, Menveo of Novartis and Mencevax of GSK.
GSK’s Mencevax vaccine has the largest market share of 85.53% while Novartis’s Menveo has only 14.47% market share. Sanofi Pasteur is the only fresh entrant in the market starting its Menactra vaccine in the later part of 2014.
Competition Concerns: The proposed acquisition raised competition concerns that after acquiring the market share of Novartis, GSK would further strengthen its dominant position in the market for Meningococcal (ACWY) vaccine, with a possibility of price increase or control over supply.
It is pertinent to mention here that new entry or expansion in relation to Meningococcal (ACWY) vaccine products requires substantial investment in research and development, which is evident from the fact that it took many years before a new entrant like Sanofi Pasteur could enter the relevant market in Pakistan.
Moreover, the effectiveness of each vaccination program differs in terms of age usage and duration of protection, therefore, it is important to have all meningococcal (ACWY) vaccinations available in the market.
Remedies/Conditions: After holding a hearing on the matter on 20 February 2015 by the CCP full bench chaired by Vadiyya Khalil, Chairperson, and including Dr. Joseph Wilson, Mueen Batlay, Dr. Shahzad Ansar, and Ikram Ul Haq Qureshi, Members, CCP concluded the Phase II review and directed GSK to take the following measures: i. GSK will ensure reliable availability of its vaccine (Meneveo) in Pakistan.
ii. GSK will divest its worldwide MenACWY vaccine business to a suitable purchaser, who will be an independent third-party vaccines supplier with the capability to maintain and continue to develop the divested business as a viable and active competitive product line, as committed by GSK to the European Commission on 21 January 2015.
iii. GSK will enter into an agreement with a third-party purchaser within a period of 6 months from the receipt of the EU clearance decision. An independent divesture trustee, who will be appointed by the European Commission, will have the mandate to sell the Divestment Business at no minimum price within another 6 months. iv. The purchaser must have an established presence in distribution channels used in the vaccine business in Pakistan.
The Commission will assess the effects of the transaction on the relevant market after one year from the date of the closing of the transaction under Section 11(13) of the Act. The applicant was directed to file an update report with the Registrar of the Commission every three months until the divestment is complete. CCP issued its No Objection Certificate to GSK for the proposed acquisition on 20 February 2015 with the above structural remedies.
In another pre-merger application, CCP approved the acquisition of the business relating to a portfolio of oncology products (excluding manufacturing) by Novartis AG (Novartis) from GlaxoSmithKline Plc. (GSK). The transaction was taken to a Phase II review in early November 2014 and was concluded on 9 February 2015.
For more information, contact:
Asfandyar Khattak
Director (Media and Communications)
Competition Commission of Pakistan (CCP)
7th Floor South, ISE Towers,
55-B, Jinnah Avenue, Islamabad, Pakistan
Tel: +92-51-9100260-3, +92-51-9100256
Fax: +92-51-9100251
Email: akhattak@cc.gov.pk
Website: www.cc.gov.pk