Mylan ($MYL) is dead set against a buyout bid from generics rival Teva Pharmaceutical Industries ($TEVA). But some U.S. consumer groups are spooked by the very talk of a deal, and they're lobbying the Federal Trade Commission against it.
Consumers Union, Public Citizen and 6 other consumer and public interest groups urged the FTC to block a Teva-Mylan merger, if and when Teva's hostile bid comes to fruition. Their argument? Together, the two companies would control enough of the generics market to drive up prices. The combined company would have a 25% market share, and "a virtual lock" on a variety of key generic meds, the letter states.
The groups specifically want the FTC to approach a Teva-Mylan tie-up differently, rather than relying on its usual approach of allowing mergers as long as the players sell off products or businesses that could crimp competition.
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| Consumer Action's Linda Sherry |
"We are concerned that Teva's takeover of Mylan would dramatically alter the generic drug marketplace," Consumer Action's Linda Sherry said in a statement. "The extensive harms to competition can't be stopped by divesting a specific line of generic drugs. We see no path forward that would make this merger okay."
And in a sort of compliment to Mylan, they contend that the company is "the only true generic" among the four biggest players in the business, which all have big branded businesses, too. In other words, Mylan is a scrappier competitor that helps push costs downward.
Unsurprisingly, Mylan CEO Heather Bresch agrees with the consumer groups. Their letter "further shines a spotlight" on how a Teva-Mylan combo could curtail competition, Bresch said in a statement Tuesday afternoon. "This transaction also would serve to eliminate the only major generics company that is not driven by significant branded business interests, thereby silencing one of the strongest advocates for the generics industry," Bresch said.
Compliment accepted.
Mylan has certainly been up for a scrap against a Teva deal. Chairman Robert Coury has been trading barbs with Teva CEO Erez Vigodman for months. The company has proposed its own deal--for OTC specialist Perrigo ($PRGO)--to block Teva's bid. And the consumer groups' protest could help Mylan counter one of Teva's major contentions--that it could pull off antitrust approval for the combo.
Teva has already filed for antitrust clearance for the potential deal, despite Mylan's rejections, and recently predicted that it can get approval within 7 months. Last week, Bloomberg reported that Teva is preparing to raise its original offer to $86 to $88 per share, up from its April bid of $82. That would boost the price to around $43 billion from $40.7 billion. Such an offer would give shareholders an alternative to consider before they meet later this summer to vote on the Perrigo deal.
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Special Reports: Top 10 generics makers by 2012 revenue - Mylan - Teva | Pharma's top 10 M&A deals of 2014
Editor's note: This story was updated with comments from Mylan CEO Heather Bresch.