FTC requires divestments for ANI and Novitium merger to proceed

The US Federal Trade Commission will require generic drug marketers ANI Pharmaceuticals (Nasdaq: ANIP) and Novitium Pharma to divest, to Prasco, ANI’s development rights to one generic drug used to treat common infections and assets with respect to another generic drug used to treat inflammation as part of a settlement resolving charges that ANI’s $210 million acquisition of Novitium, announced in March this year, likely would be anticompetitive. The divestitures are for generic sulfamethoxazole-trimethoprim oral suspension, also known as SMX-TMP, and generic dexamethasone tablets.

Generic SMX-TMP oral suspension is an antibiotic used to treat a variety of infections, including ear infections, urinary tract infections, and bronchitis. ANI is a current participant in this market, while Novitium is one of a limited number of companies well positioned to enter. Generic dexamethasone tablets are an oral steroid product used to treat inflammation associated with a variety of conditions, including certain types of arthritis, allergic reactions, skin diseases, and breathing problems. Both ANI and Novitium have products in development in this market and the acquisition would eliminate a potential entrant in an already concentrated market. According to the complaint, without a remedy, the acquisition would likely harm future competition in U.S. markets for both of these generic products.

“Today’s settlement preserves future competition in two important generic pharmaceutical markets by ensuring that ongoing product development efforts for both drugs are in the hands of firms that have the same incentive to enter the market and drive down prices as existed between ANI and Novitium prior to the merger,” said Holly Vedova, director of the Bureau of Competition. “Preserving the potential for entry ensures that the merged firm does not kill off ongoing product development efforts that could cause prices for its products to go down. We will remain vigilant in our efforts to protect existing and future competition in pharmaceutical markets,” she added.