Don't wait up. FTC delays Novartis' Sandoz deal with Aurobindo into 2020: report

Wooden gavel over small pile of multi-colored pills on dark background.
The U.S. antitrust watchdog is reportedly looking closer at a generics transaction between Novartis' Sandoz and Aurobindo, as both are named in a price-fixing lawsuit. (Getty Images/AVNphotolab)

Word is that Novartis’ $1 billion asset sale to Aurobindo Pharma likely won’t happen this year—and antitrust worries are to blame.

The U.S. Federal Trade Commission (FTC) has asked for more information on a lawsuit against Aurobindo, forcing the two companies to delay the deal past its planned 2019 closure. “[T]he earliest possible date for the divestment is set for February,” The Economic Times reported, quoting one Aurobindo executive who asked to remain anonymous.

Novartis CEO Vas Narasimhan said a few days ago that the FTC had asked for more information related to the pact, which would send some Sandoz dermatology business and some U.S. generics to Aurobindo. It could wrap up the deal “in the coming months, pending regulatory approval,” the Swiss drugmaker said at the time.

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In a statement shared with FiercePharma, an Aurobindo spokesperson said the company is “making good progress in working with the FTC,” but declined to provide any specifics of its discussions with the agency. “We look forward to sharing a more detailed update at an appropriate time,” it said.

It’s not yet clear which lawsuit the FTC has laid eyes on, but when it comes to antitrust matters, one in the U.S. pops up.

In May, 44 states led by Connecticut filed a lawsuit against 20 generics makers for price fixing. The U.S. states accuse Teva of orchestrating a scheme with the other companies, saying they conspired to divvy up the generics market to prevent drug prices from dropping or simply to inflate them. It’s the second lawsuit of its kind after an initial one filed in late 2016, also initiated by the Connecticut attorney general's office.

Both Sandoz and Aurobindo are named in the updated lawsuit. But for the FTC, the scrutiny is likely focused on Aurobindo, the buyer.

RELATED: Teva starred in price-fixing scheme, but 19 other companies 'willingly' joined, attorneys general claim

By paying Novartis $900 million upfront, Aurobindo is getting some of Sandoz' U.S. assets, namely a range of oral generics and its dermatology business. In total, Aurobindo will claim 300 marketed products and some development projects as well as three manufacturing facilities in Wilson, North Carolina, and Hicksville and Melville, New York.

The tie-up would make Aurobindo the second largest generics player in the U.S. by prescription numbers—next only to Teva—and would hence give it more power over pricing.

When the deal was first unveiled last September, Novartis said it expected to close “in the course of 2019.”

During a conference call in May, Aurobindo U.S. Chief Financial Officer Swami Iyer estimated it would take eight to 12 weeks for the company to win FTC approval, pending some proposed product selloffs. But on its earnings call in August, Iyer shied away from providing a timeline; he only said the deal would close “sometime soon or in the near future.”

Editor's Note: This story has been updated with a statement from Aurobindo.

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