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HomeEx-post evaluation, EU competition enforcement and acquisitions of innovative competitors in the pharma sector leading to the discontinuation of overlapping drug research and development projects
Final report and appendices
Julkaisun metatiedot
In recent years, concerns about transactions in the pharmaceutical sector harming innovation and competition through the discontinuation of overlapping drug R&D projects, so-called “killer acquisitions”, have prompted regulatory action and research. The objective of this study is twofold. First, the “fact-finding” challenge aims at assessing the pervasiveness and characteristics of the phenomenon of killer acquisitions. Second, the “evaluation” challenge aims to conduct an ex-post evaluation of cases that may have involved killer acquisitions. Under the fact-finding challenge, the study collects publicly available evidence on a large sample of transactions occurring in the period 2014-2018, seeking to determine whether any may have led to a potential killer acquisition. The study is novel in that it assesses not only mergers and acquisitions, but also other types of transactions such as licensing deals and R&D cooperation agreements. In addition, the fact finding assessment goes beyond a statistical assessment of the probability of killer acquisitions by applying the following 2-stage approach: i) a large-scale and automated analysis to detect transactions followed by discontinuations of overlapping drug R&D projects not seemingly justified by technical or commercial reasons and ii) a qualitative, case-by-case examination to evaluate the key elements of a killer acquisition hypothesis in some of the most relevant discontinuations identified through the large-scale analysis. Out of a total of 6,315 transactions that were identified in the pharmaceutical sector in the period 2014-2018, information on the remit of the deal was available for 3,193 transactions. Out of these, 240 transactions involved the acquisition of potentially substitutable drug R&D projects, conservatively based on a narrow definition of competitive overlap. A significant proportion thereof (89 out of 240, or 37% of transactions) were followed by the discontinuation of one of the overlapping drug R&D projects and warranting further scrutiny, in the sense that – based on publicly available data – there was no clearly identifiable technical or safety reason explaining the discontinuation in question. The study further finds that public information sources alone do not typically suffice to conclusively assess the existence of a killer acquisition theory of harm, or the absence thereof. Any further scrutiny has to largely rely on non-public (company internal) information. Under the evaluation challenge, the study examines the Commission’s past efforts to address potential killer acquisitions, and the legal framework guiding the Commission’s actions. The study first analyses how well the Commission’s substantive merger assessment dealt with five notified concentrations in the pharmaceutical sector. It finds that the Commission correctly assessed the killer acquisition theories of harm in these cases, with a suggestion for potential improvement in the remedy design. Then, it analyses the suitability of the merger and antitrust tools to deal with killer acquisitions which are not notified to the Commission, by simulating Art. 22 EUMR and Art. 101/102 TFEU assessments in two case studies. Past experience and a legal assessment suggest that Art. 22 EUMR (for concentrations) and Art. 101/102 TFEU (for non-concentrations) are valuable tools (albeit with limitations) to address such killer acquisitions, with potential for improvement in the establishment of a registry or notice system to identify potentially harmful transactions.
- Julkaistu:
- Tekijäorganisaatio (t): Directorate-General for Competition (Euroopan komissio) , Lear
- Aiheet: Kilpailupolitiikka , Lääke- ja kosmetiikkateollisuus
- Aihe: EU:n kilpailupolitiikka , innovaatio , kertomus , kilpailuoikeus , lääketeollisuus , tutkimus ja kehitys
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| ISSN | ISBN 978-92-68-22468-7 | DOI 10.2763/3714497 | Luettelonumero KD-01-24-008-EN-N |
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Paperikopio
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| ISSN | ISBN 978-92-68-26299-3 | DOI 10.2763/5391364 | Luettelonumero KD-01-24-008-EN-C |
- Released on EU publications website:
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